Huscoke Holdings Limited - Proxy Solicitation & Information Statement 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Frankie Dominion International Limited, you should at once hand this circular and the enclosed form of proxy to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or registered institution or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

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(incorporated in Bermuda with limited liability)

(Stock code: 704)

(I) VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF SALE SHARES AND SALE DEBTS INVOLVING ISSUE OF CONVERTIBLE BONDS; (II) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND

(III) NOTICE OF SPECIAL GENERAL MEETING

Financial adviser to the Company

A notice convening the special general meeting to be held at the Board Room, 1st Floor, The Aberdeen Marine Club, 8 Shum Wan Road, Aberdeen, Hong Kong at 10:30 a.m. on Monday, 7 April 2008 (or any adjournment thereof) is set out on pages 216 to 218 of this circular. Form of proxy for use in the special general meeting is enclosed. Whether or not you propose to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding of the special general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting thereof, should you so desire.

Thursday, 20 March 2008

CONTENTS

			Page
Definitions . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			7
Appendix I	–	Financial information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	34
Appendix II	–	Accountants’ report on Huscoke Group . . . . . . . . . . . . . . . . . . . . . . .	88
Appendix III	–	Financial information on the acquired plants and
		machineries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	120
Appendix IV	–	Pro forma financial information on
		the Enlarged Group I, II and III . . . . . . . . . . . . . . . . . . . . . . . . . . . .	142
Appendix V	–	Valuation report on the Huscoke Group. . . . . . . . . . . . . . . . . . . . . . .	180
Appendix VI	–	Valuation report on the Coal-related Ancillary Business . . . . . . .	187
Appendix VII	–	Valuation report on the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	196
Appendix VIII–		General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	207
Notice of SGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	216

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms or expressions shall have the meanings set out below:

“Acquisition”

the proposed acquisition of the Sale Shares and the Sale Debts by the Company under the Sale and Purchase Agreement

“Acquisition Price” the aggregate consideration of initially HK$2,400 million (subject to adjustment) for the Acquisition

“Announcement”

the announcement of the Company dated 24 January 2008 in relation to the Acquisition

“Associate(s)”

has the meaning given to that term in the Listing Rules

“Audited Accounts”

in respect of any particular financial year or years, the audited consolidated profit and loss accounts of the Target Group for the year ending the relevant financial year or years and the audited consolidated balance sheet of the Group as at the closing date of relevant financial year or years, together with all notes thereto, in the agreed form, which profit and loss accounts and balance sheet shall be prepared in accordance with the accounting principles generally accepted in Hong Kong at such time and audited in accordance with the auditing standards and guidelines issued from time to time by the Hong Kong Institute of Certified Public Accountants

“Board” board of the Directors “Business Day”

a day (other than Saturday and Sunday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

“Coal-related Ancillary businesses of coal washing service, electric power Businesses” generation, transport services in respect of coal and other ancillary materials and generation of heat as more detailed described in the paragraph headed “Information on the Target Group” under the section headed “Letter from the Board” of this circular

“Company” Frankie Dominion International Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Stock Exchange

“Completion” the First Completion, or as the case may be, the Second Completion

– 1 –

DEFINITIONS

“Completion Accounts”

the profit and loss account for the period commencing from 1 January 2008 and ending on the First Completion Date or the Second Completion Date, as the case may be, and the consolidated balance sheet of the First Target Group as at the First Completion Date (or, as the case may be, the Second Target Group as at the Second Completion Date), which are to be prepared in accordance with the accounting principles generally adopted in Hong Kong at such time

“connected person(s)” has the meaning given to that term in the Listing Rules
“Convertible Bonds” collectively, the Tranche 1 Bonds and the Tranche 2 Bonds
“Conversion Period” the period commencing from the First Completion Date and Second Completion Date, as the case may be, and expiring on the 5th anniversary of such date of commencement up to 4:00 p.m. (Hong Kong time)
“Conversion Price”
the initial conversion price of HK$0.40 per Conversion Share, subject to adjustments pursuant to the terms of the Convertible Bonds
“Conversion Share(s)” the Share(s) to be allotted and issued upon the exercise of the conversion right(s) in respect of the Convertible Bonds
“Directors” directors of the Company
“Enlarged Group” or the Group as enlarged by the Acquisition “Enlarged Group III”
“Enlarged Group I” the Group as enlarged by the First Acquisition
“Enlarged Group II” the Group as enlarged by the Second Acquisition

“First Acquisition” the purchase of the First Sale Shares and the First Sale Debts by the Purchaser from the Vendor subject to the terms and conditions of the Sale and Purchase Agreement

“First Acquisition Price” the aggregate consideration of initially HK$1,200 million (subject to adjustment) for the First Acquisition

“First Completion” completion of the First Acquisition in accordance with the terms and conditions of the Sale and Purchase Agreement

– 2 –

DEFINITIONS

“First Completion Date”	being the third Business Day after the fulfillment (or
	waiver) of the closing conditions as to the First
	Completion or such other date as the parties shall agree
	in writing under the Sale and Purchase Agreement
“First HK Company”	Huscoke International Group Limited (和嘉國際集團
	有限公司), a company incorporated in Hong Kong with
	limited liability on 26 January 2005
“First Sale Debts”	being the face value of the loans outstanding as at the
	First Completion made by or on behalf of the Vendor
	to the First Target Company
“First Sale Shares”	being such number of share as shall represent the entire
	issued share capital in the First Target Company
	immediately before the First Completion
“First Target Group”	the First Target Company, the First HK Company and
	the HK Subsidiary
“First Target Company”	Pride Eagle Investments Limited, a company
	incorporated in British Virgin Islands with limited
	liability on 28 November 2007
“Group”	the Company and its subsidiaries
“HK Subsidiary”	Ocean Signal Limited (海誌有限公司), a company
	incorporated in Hong Kong with limited liability on 7
	November 2007
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Huscoke Group”	the First HK Company and the HK Subsidiary
“Independent Third Party	the third party (parties) independent of the Company
(Parties)”	and connected persons of the Company
“Instrument”	the instrument constituting the Tranche 1 Bonds and
	the Tranche 2 Bonds
“Last Trading Day”	11 January 2008, being the trading day immediately
	prior to the date on which the Shares were suspended
	from trading on the Stock Exchange pending the
	release of the Announcement

– 3 –

DEFINITIONS

“Latest Practicable Date”	17 March 2008, being the latest practicable date before
	the printing of this circular for the purpose of
	ascertaining certain information for inclusion in this
	circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Long Stop Date”	5:00 p.m. on 31 May 2008 or such later date as the
	Vendor and the Purchaser may agree in writing
“Management Accounts”	the unaudited consolidated management accounts
	comprising the consolidated balance sheet of the First
	Target Company as at 28 November 2007 and the
	consolidated income statement of the First Target
	Company for the period from 1 January 2007 to 28
	November 2007
“PRC”	the People’s Republic of China
“PRC Operation Licence(s)”	the licence(s) held by (or pending registration) to be
	held by) the PRC Subsidiaries in connection with the
	Coal-related Ancillary Businesses
“PRC Subsidiaries”	such company or companies to be established in the
	PRC and owned (as to 90% immediately before the
	Second Completion) by the Second HK Company for
	taking up the Coal-related Ancillary Businesses
“Promissory Note”	the promissory note in the principal amount of HK$100
	million, which may be issued by the Purchaser to the
	Vendor for partial settlement of part of the First
	Acquisition Price or, as the case may be, part of the
	Second Acquisition Price
“Purchaser”	Rich Key Enterprises Limited, a wholly-owned
	subsidiary of the Company
“Sale and Purchase Agreement”	the conditional sale and purchase agreement dated 11
	January 2008 entered into between the Company, the
	Vendor and the Purchaser in relation to the Acquisition
“Sale Debts”	collectively, the First Sale Debts and the Second Sale
	Debts
“Sale Shares”	collectively, the First Sale Shares and the Second Sale
	Shares

– 4 –

DEFINITIONS

“Second Acquisition”	the purchase of the Second Sale Shares and the Second
	Sale Debts by the Purchaser from the Vendor subject
	to the terms and conditions of the Sale and Purchase
	Agreement
“Second Acquisition Price”	the aggregate consideration of initially HK$1,200
	million (subject to adjustment) for the Second
	Acquisition
“Second Completion”	completion of the Second Sale Shares and the Second
	Sale Debts in accordance with the terms and conditions
	of the Sale and Purchase Agreement
“Second Completion Date”	being the third Business Day after the fulfillment (or
	waiver) of the closing conditions as to the Second
	Completion or such other date as the parties shall agree
	in writing under the Sale and Purchase Agreement
“Second HK Company”	Huscoke International Investment Limited (和嘉國際
	投資有限公司), a company incorporated in Hong Kong
	with limited liability on 8 January 2008
“Second Sale Debts”	being the face value of the loans outstanding as at the
	Second Completion made by or on behalf of the Vendor
	to the Second Target Company
“Second Sale Shares”	being such number of share as shall represent the entire
	issued share capital in the Second Target Company
	immediately before the Second Completion
“Second Target Company”	Joy Wisdom International Limited, a company
	incorporated in British Virgin Islands with limited
	liability on 20 September 2007
“Second Target Group”	the Second Target Company, the Second HK Company
	and the PRC Subsidiaries
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
“SGM”	the special general meeting to be convened and held
	by the Company for considering, and if thought fit,
	approving, among other things, (i) the increase in
	authorised share capital; and (ii) the Sale and Purchase
	Agreement and the transactions contemplated thereby

– 5 –

DEFINITIONS

“Shareholder Loans”	the interest-free loans owing from time to time by
	members of the First Target Group (or, as the case
	may be, the Second Target Group) to the Vendor and
	its Associates
“Shareholder(s)”	holder(s) of the Shares
“Shares”	ordinary shares of HK$0.10 each in the share capital
	of the Company
“sq.m.”	square meter
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Group”	collectively, the First Target Group and the Second
	Target Group or, where the context so requires, any
	one of them, and the expressions “member of the
	Target Group” and “Target Group Company” shall be
	construed accordlingly
“Tranche 1 Bonds”	the Convertible Bonds in the principal amount of
	HK$1,100 million to be issued by the Company in
	favour of the Vendor at the First Completion pursuant
	to the Sale and Purchase Agreement
“Tranche 2 Bonds”	the Convertible Bond in the principal amount of
	HK$1,100 million to be issued by the Company in
	favour of the Vendor at the Second Completion
	pursuant to the Sale and Purchase Agreement
“Vendor”	Mr. Wu Jixian, an Independent Third Party
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

For illustrative purpose, the conversion rate between HK$ and RMB is at HK$1.00 = RMB0.93 as at 31 December 2007.

– 6 –

LETTER FROM THE BOARD

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(incorporated in Bermuda with limited liability)

(Stock code: 704)

Executive Directors:

Mr. Lam Po Kwai, Frankie (Chairman) Ms. Wong Yau Ching, Maria (Vice chairman) Ms. So Man Yee, Katherine Mr. Chim Kim Lun, Ricky Mr. Cheng Kwok Hing, Andy

Non-Executive Director:

Ms. Lee Yuen Bing, Nina

Independent Non-executive Directors: Mr. Au Son Yiu Mr. Lee Johnson Dr. Tang Tin Sek

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Principal Office in Hong Kong: 1st Floor Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang Hong Kong

20 March 2008

To the shareholders of the Company

Dear Sir/ Madam,

(I) VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF SALE SHARES AND SALE DEBTS INVOLVING ISSUE OF CONVERTIBLE BONDS;

(II) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL;

AND

(III) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement, the Purchaser, a wholly-owned subsidiary of the Company, and the Company, as the Purchaser’s warrantor, entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Purchaser has agreed to acquire and the Vendor has agreed to sell or procure the sales of (a) the First Sale Shares and First Sale Debts; and (b) the Second Sale Shares and the Second Sale Debts. The Acquisition Price of HK$2,400 million (subject to adjustment) comprises as to HK$1,200 million (subject to adjustment) for the First Acquisition, and as to HK$1,200 million (subject

– 7 –

LETTER FROM THE BOARD

to adjustment) for the Second Acquisition. In each case, such price shall be satisfied as to (i) HK$1,100 million by the Company issuing the Tranche 1 Bonds or, as the case may be, the Tranche 2 Bonds; and (ii) HK$100 million by the Purchaser’s issue of the Promissory Note or payment in cash (solely at the option of the Purchaser) to the Vendor or in such other manner as agreed between the Purchaser and the Vendor at the First Completion and the Second Completion respectively.

To satisfy the Conversion Shares to be issued upon the exercise of the conversion rights in respect of the Convertible Bonds after the Completion, the Company proposes to increase its authorised share capital from HK$100 million comprising 1,000 million Shares to HK$1,000 million comprising 10,000 million Shares, by the creation of an additional 9,000 million Shares, which will be put at the SGM for Shareholders’ approval.

The purpose of this circular is to provide you with, amongst other things, (i) further details of the Acquisition and other disclosures in connection with the Acquisition required pursuant to the Listing Rules; (ii) the proposed increase in the authorised share capital of the Company; and (iii) a notice convening the SGM to seek the approval from the Shareholders of (i) the increase in authorised share capital of the Company; (ii) the Sale and Purchase Agreement and the issue of the Convertible Bonds and all the other transactions contemplated under the Sale and Purchase Agreement.

THE SALE AND PURCHASE AGREEMENT

Date: 11 January 2008 (after trading hour)

Parties:

(1) Purchaser : Rich Key Enterprises Limited, a wholly-owned subsidiary of the Company
(2) Purchaser’s warrantor : the Company, which jointly and severally with the Purchaser, gives certain representations, warranties and undertaking in favour of the Vendor
(3) Vendor : Wu Jixian

To the best knowledge, information and belief of the Directors and having made all reasonable enquiries, as at the Latest Practicable Date:

(a) the Vendor is an Independent Third Party;
(b) the Vendor is independent of Golden Mount Limited (being the substantial shareholder and the single largest shareholder of the Company) and its ultimate beneficial owner;
(c) the Vendor is not a party “acting in concert” (within the meaning of the Codes on Takeovers and Mergers and Share Purchases) with Golden Mount Limited and its ultimate beneficial owner;

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LETTER FROM THE BOARD

(d) save for the negotiation and signing of the Sale and Purchase Agreement, the Vendor does not have any prior relationship and/or transactions with the Company; and
(e) the Vendor does not have any prior relationship and/or transaction with Golden Mount Limited and its ultimate beneficial owner.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Purchaser has agreed to acquire and the Vendor has agreed to sell or procure the sales of (i) the Sale Shares, which will comprise such number of shares in each of the First Target Company and the Second Target Company, representing 100% of the entire issued share capital in the First Target Company and the Second Target Company immediately before the First Completion and the Second Completion respectively; and (ii) the Sale Debts.

Further information regarding the Target Group is set out in the paragraph headed “Information on the Target Group” below.

Consideration

The Acquisition Price is initially HK$2,400 million, among which, as to HK$ 1,200 million for the First Acquisition, and as to HK$1,200 million for the Second Acquisition. In each case, such price shall be satisfied at each of the First Completion and the Second Completion in the following manner, which is subject to adjustment as set out in the paragraph headed “Adjustments to the Acquisition Price” below:

(i) as to HK$1,100 million by the Company’s issue to the Vendor (or such person(s) as nominated by the Vendor) the Tranche 1 Bonds or, as the case may be, the Tranche 2 Bonds; and
(ii) as to HK$100 million by the Purchaser’s issue and delivery to the Vendor (or such person(s) as nominated by the Vendor) the Promissory Note or, solely at the option of the Purchaser, by cash payment by the Purchaser or the Company to the Vendor (or such person(s) as nominated by the Vendor) or in such other manner as may be agreed between the Purchaser and the Vendor.

The consideration for each the First Sale Debts and Second Sale Debts is an amount equal to the face value of the First Sale Debts as at the First Completion Date and the face value of the Second Sale Debts as at the Second Completion Date respectively. The consideration for each of the First Sale Shares and the Second Sale Shares is an amount equal to the difference between the First Acquisition Price (or, the Second Acquisition Price, as the case may be) and the consideration for the First Sale Debts (or, the Second Sale Debts, as the case may be). In the event that the Sale Debts exceeds the Acquisition Price, the entirety of such Sale Debts shall be assigned to the Purchaser (or to its order) at a consideration of the Acquisition Price less HK$1.

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LETTER FROM THE BOARD

The Acquisition Price was determined after arm’s length negotiation with reference to the business prospects of the Target Group, a price earnings multiple of about 12 times which is derived from the Acquisition Price divided by the sum of the Guaranteed 2008 First Group Net Profit and Guaranteed 2008 Second Group Net Profit (as defined in the paragraph headed “Adjustments to the Acquisition Price” below), and the price earnings multiple with reference to the weighted average price earnings ratio of approximately 20 times of the Hong Kong Hang Seng Index and the Hong Kong Hang Seng Composite Index in energy sector as at December 2007. The Directors (including the independent non-executive Directors) consider that the terms and conditions of the Acquisition are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. In the event that the maximum of HK$200 million (equivalent to the initial amount of the Promissory Note) for the Acquisition is to be satisfied in cash, such portion of the cash payment will be funded by internal resource of the Group and/or third party financing.

Adjustments to the Acquisition Price

Pursuant to the Sale and Purchase Agreement, the Vendor represents and warrants to the Purchaser that as at each of the First Completion Date and the Second Completion Date:

(i) the audited consolidated net tangible assets of each of the First Target Group (before adjustment in relation to any valuation of any of the properties owned by it) as at the First Completion Date and the Second Target Group (before any adjustment in relation to any valuation of any of the PRC Operation Licences held by the PRC Subsidiaries in connection with the Coal-related Ancillary Businesses) as shown in the Completion Accounts shall not be less than HK$100 million (the “First NTA Warranty”) and HK$400 million (the “Second NTA Warranty”) respectively;
(ii) (aa) in relation to the First Acquisition, otherwise than those as shown in the relevant Management Accounts in respect of each of the First Target Group; and (bb) in relation to the Second Acquisition, there shall be no other borrowings, obligations or liabilities (whether actual or contingent) of the Target Group owing to any other party (whether the Vendor or its Associates or otherwise); and
(iii) (otherwise than those as shown in the Management Accounts or those disclosed to and agreed by the Purchaser in advance) there are no guarantees given by any Target Group whatsoever and howsoever.

If there occurs any breach of the warranty set out in (i) above, the First Acquisition Price (or the Second Acquisition Price, as the case may be) shall be reduced by an amount equal to the shortfall (or to the extent that the shortfall is not more than HK$25 million for the First Target Group, or HK$100 million for the Second Target Group, the Vendor may elect to make up the shortfall by payment as gift* to the First Target Company or to the Second Target Company, as the case may be, of such amount of cash as equal to the shortfall within five Business Days after the auditor’s issue of a certificate on the

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LETTER FROM THE BOARD

Completion Accounts). If there occurs any breach of the warranties set out in (ii) or (iii) above, the First Acquisition Price (or, the Second Acquisition Price, as the case may be) shall be reduced by an amount equal to the aggregate amount of such additional liabilities, provided that if the shortfall in the audited consolidated net tangible assets of the Target Group is caused by the same liabilities in connection with the breach of the warranty (ii) above, the above adjustment to the First Acquisition Price (or, the Second Acquisition Price, as the case may be) shall be made once and shall not be double-counted. In the event of a reduction of the First Acquisition Price (or the Second Acquisition Price, as the case may be) pursuant to the foregoing adjustment, the Purchaser shall issue and deliver to the Vendor, against the delivery up for cancellation of the then Convertible Bonds held by it, new Convertible Bonds for the balance of the First Acquisition Price (or, as the case may be, the Second Acquisition Price) so adjusted and payable.

The above mentioned “payment as gift” arrangement is an alternative way provided for the Vendor to make the shortfall by cash directly to the relevant Target Group, instead of the cancellation and re-issue of the Convertible Bonds arrangements, where such shortfall is equal to or less than one fourth of the First NTA Warranty (or, the Second NTA Warranty, as the case may be).

In the event that the amount (the “Vendor Retained First Debt” and the “Vendor Retained Second Debt”) calculated based on the following formula:

Vendor Retained First Debt = {The total consolidated or combined tangible assets of the First Target Group as at the First Completion Date} less {the total consolidated or combined liabilities of the First Target Group owing to parties other than the Vendor and his Associates as at the First Completion Date} less {HK$100 million}

Vendor Retained Second Debt = {The total consolidated or combined tangible assets of the Second Target Group as at the Second Completion Date} less {the total consolidated or combined liabilities of the Second Target Group owing to parties other than the Vendor and his Associates as at the Second Completion Date} less {HK$400 million}

is greater than zero, the Vendor Retained First Debt (or, as the case may be, the Vendor Retained Second Debt) shall be excluded from (and shall not form part of) the First Sale Debts (or, as the case may be, the Second Sale Debts), and the Vendor Retained First Debt (or, as the case may be, the Vendor Retained Second Debt) shall, notwithstanding the First Completion (or, as the case may be, the Second Completion), remain to be owing by the relevant members of the First Target Group (or, as the case may be, the Second Target Group) to the Vendor and shall be repaid by such members of the First Target Group (or, as the case may be, the Second Target Group) to the Vendor in accordance with the then prevailing terms of advances made by the Vendor or his Associates.

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LETTER FROM THE BOARD

Furthermore, the Vendor irrevocably guarantees to the Purchaser that the net profit after minority interests but before tax and before extraordinary or exceptional items of each of the First Target Group (“First Group Net Profit”) and the Second Target Group (“Second Group Net Profit”) for the financial year ending 31 December 2008 as shown in their respective Audited Accounts (“Audited 2008 First Group Net Profit” and “Audited 2008 Second Group Net Profit” respectively) shall not be less than HK$100 million (“Guaranteed 2008 First Group Net Profit” and “Guaranteed 2008 Second Group Net Profit” respectively).

If the Audited 2008 First Group Net Profit, or as the case may be, the Audited 2008 Second Group Net Profit is less than HK$100 million, then the First Acquisition Price, or, as the case may be, the Second Acquisition Price shall be adjusted by the following formula:

“Adjusted First Acquisition Price” = HK$1,100 million (Note 1) x (Audited 2008 First Group Net Profit/Guaranteed 2008 First Group Net Profit)

“Adjusted Second Acquisition Price” = HK$800 million (Note 2) x (Audited 2008 Second Group Net Profit/Guaranteed 2008 Second Group Net Profit)

Notes:

HK$1,100 million = the First Acquisition Price – the First NTA Warranty
HK$800 million = the Second Acquisition Price – the Second NTA Warranty

or where the Audited 2008 First Group Net Profit (or, as the case may be, the Audited Second Group Net Profit) is less than zero, then the Adjusted First Acquisition Price (or, as the case may be, the Adjusted Second Acquisition Price) shall be deemed to be zero.

In the event of a reduction of the First Acquisition Price or the Second Acquisition Price pursuant to the above adjustment, (a) the Vendor shall, within five Business Days after the date of publication of the audited accounts of the First Target Group (or, as the case may be, the Second Target Group) for the financial year ending 31 December 2008, make payment to the Purchaser for the reduced amount of the First Acquisition Price (or, as the case may be, the Second Acquisition Price) by way of either cash or the delivery up for cancellation of the then Convertible Bonds held by it, and (b) against the Vendor’s discharge of its said payment obligations pursuant to paragraph (a) above, the Purchaser shall (within five Business Days from the date of the Vendor’s discharge of the said payment obligations) procure the issue by the Company and delivery to the Vendor of the new Convertible Bonds for the balance (if any) of the First Acquisition Price, or as the case may be, the Second Acquisition Price payable on the basis of the First Acquisition Price, or as the case may be, the Second Acquisition Price so adjusted. For the avoidance of doubt, no adjustment to the First Acquisition Price or the Second Acquisition Price shall be made if the Audited 2008 First Group Net Profit or the Audited 2008 Second Group Net Profit is equal to or greater than HK$100 million.

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LETTER FROM THE BOARD

The rationale of the above adjustments is based on the commercial decision between the parties after arm’s length negotiation, with reference to the First NTA Warranty and the proportion of the Guaranteed 2008 First Group Net Profit achieved by the Audited 2008 First Group Net Profit, or as the case may be the Second NTA Warranty and the proportion of the Guaranteed 2008 Second Group Net Profit achieved by the Audited 2008 Second Group Net Profit.

Closing Conditions

First Acquisition

Completion of the First Acquisition is subject to the following conditions being fulfilled and remaining satisfied as at the First Completion:

(a) (if required) the Bermuda Monetary Authority granting its permission to the allotment and the issue of the Conversion Shares and the increase in the authorised share capital of Company;
(b) the Listing Committee of the Stock Exchange having granted or having agreed to grant the listing of, and permission to deal in, the Conversion Shares;
(c) the approval by the Shareholders (or, as the case may be, the independent Shareholders) at the SGM of the Sale and Purchase Agreement and the transactions contemplated thereby and all other consents and acts required under the Listing Rules having been obtained and completed or, as the case may be, the relevant waiver from compliance with any of such rules having been obtained from the Stock Exchange;
(d) (if required) all requisite waivers, consents and approvals from any relevant governments or regulatory authorities or other relevant third parties in connection with the First Acquisition contemplated by the Sale and Purchase Agreement having been obtained;
(e) all relevant approvals, consents, registration and filing procedures relating to members of the First Target Group in connection with the First Acquisition contemplated by the Sale and Purchase Agreement having been obtained/ completed;
(f) the Purchaser being reasonably satisfied with the results of the due diligence exercise (whether legal, accounting, financial, operational or other aspects that the Purchaser considers relevant) on the First Target Group and and their related businesses, assets, liabilities, activities, operations, prospects and other status which the Purchaser, its agents or professional advisers think necessary and appropriate to conduct;

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(g) the Purchaser being satisfied, from the date of the Sale and Purchase Agreement and at any time before the First Completion, that the warranties given by the Vendor under the Sale and Purchase Agreement remain true, accurate, not misleading or in breach in any material respect and that no events have suggested that there were any breach thereof or other provisions of the Sale and Purchase Agreement by the Vendor;
(h) the Purchaser being satisfied that, from the date of the Sale and Purchase Agreement to the First Completion, there has not been any material adverse change in respect of any member of the First Target Group;
(i) all outstanding Shareholder Loans owing from the First Target Group to the Vendor’s Associates having been assigned to the Vendor immediately before the First Completion and all necessary approvals, consents, authorisations and licences in relation thereto having been obtained from the relevant governmental authorities or parties concerned; and
(j) no indication being received from the Stock Exchange that the transactions contemplated under the Sale and Purchase Agreement will be treated or, as the case may be, ruled by the Stock Exchange as a “reverse takeover” under the Listing Rules.

In respect of the First Acquisition, the Purchaser may at its absolute discretion at any time waive in writing any of the Closing Conditions referred to in (d), (e), (f), (g), (h) and (i) above (to the extent it is capable of waiving) and such waiver may be made subject to such terms and conditions as determined by the Purchaser.

Second Acquisition

Completion of the Second Acquisition in accordance with the Sale and Purchase Agreement is subject to the following conditions being fulfilled and remaining satisfied as at the Second Completion (or waived by the Purchaser pursuant to the Sale and Purchase Agreement):

(a) receipt by the Purchaser from the Vendor of a legal opinion on the PRC laws (in such form and substance to the Purchaser’s satisfaction) covering, among others, the following major issues:
(i) each of the PRC Subsidiaries having been duly established and validly subsisting;
(ii) each of the PRC Subsidiaries having obtained all relevant operating permits required at the time of its establishment and such permits remaining valid;
(iii) the legality of the operation and business of each of the PRC Subsidiaries;

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(iv) each of the PRC Subsidiaries having obtained the PRC Operation Licences and all such licences being in full force and effect;
(v) (where applicable) each of the PRC Subsidiaries having obtained the rights to use and occupy the properties owned, leased or occupied by the Second Target Group;
(vi) (if required) all necessary approval, authorisation, consent, registration and filings required having been obtained and effected by the Second Target Company, the Second HK Company and/or each of the PRC Subsidiaries (where applicable) in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder, and such other aspects of the PRC law as the Purchaser may consider appropriate or relevant to the transactions contemplated by the Sale and Purchase Agreement;
(b) same as condition (a) set out in the sub-paragraph headed “ First Acquisition ” above;
(c) same as condition (b) set out in the sub-paragraph headed “ First Acquisition ” above;
(d) same as condition (c) set out in the sub-paragraph headed “ First Acquisition ” above;
(e)&(f) same as conditions (d) and (e) set out in the sub-paragraph headed “ First Acquisition ” above, save that the “First Acquisition” and the “First Target Group shall be replaced by the “Second Acquisition” and the “Second Target Group” respectively;
(g) the Purchaser being reasonably satisfied with the results of the due diligence exercise (whether legal, accounting, financial, operational or other aspects that the Purchaser considers relevant) on the Second Target Group, the Coal-related Ancillary Businesses and their related businesses, assets, liabilities, activities, operations, prospects and other status which the Purchaser, its agents or professional advisers think necessary and appropriate to conduct;
(h)&(i) same as conditions (f) and (g) set out in the sub-paragraph headed “ First Acquisition ” above, save that the “First Completion” shall be replaced by the “Second Completion”;
(j) the Vendor providing the Purchaser with a confirmation or other documents, showing that all licence fees and other fees required to be paid by the PRC Subsidiaries to the relevant governmental authorities in respect of the Coalrelated Ancillary Businesses, all the fees required to be paid by the PRC Subsidiaries in obtaining the PRC Operation Licences having been fully paid and there are no outstanding fees;

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(k) same as condition (i) set out in the sub-paragraph headed “ First Acquisition ”, save that the “First Target Group” shall be replaced by the “Second Target Group; and
(l) same as condition (j) set out in the sub-paragraph headed “ First Acquisition ” above.

In respect of the Second Acquisition, the Purchaser may at its absolute discretion at any time waive in writing any of the Closing Conditions referred to in (a), (e), (f), (g), (h), (i), (j) and (k) above (to the extent it is capable of waiving) and such waiver may be made subject to such terms and conditions as are determined by the Purchaser.

The rights to waive the above Closing Conditions in respect of the First Acquisition and the Second Acquisition are conferred to the Purchaser for the purpose of giving it the maximum commercial flexibilities to take the lead of the transactions. Such rights will only be exercised if and when the Directors believe such exercise is in the best interests of the Company and will not prejudice the Company’s interest to a material extent. The Purchaser does not have any immediate intention to waive any of the Closing Conditions. The Directors confirm that they will ensure that no waiver would be made to the detriment of the interests of the Shareholders and the Company as a whole. If the Closing Conditions are not fulfilled or waived on or before the Long Stop Date, the Sale and Purchase Agreement shall lapse and be of no further effect (save for certain provisions under the Sale and Purchase Agreement), and no party to the Sale and Purchase Agreement shall have any claim against or liability to the other parties, save in respect of any antecedent breaches of the Sale and Purchase Agreement, including any breaches of the Closing Conditions.

Completion

The First Completion and the Second Completion shall take place at 11:00 a.m. (Hong Kong time) on the First Completion Date and the Second Completion Date respectively or such other date as may be agreed between the parties to the Sale and Purchase Agreement. The First Completion and the Second Completion shall take place separately, irrespective of the completion of the other. Upon the First Completion, the First Target Company will become a wholly-owned subsidiary of the Company. Upon the Second Completion, the Second Target Company will become a wholly-owned subsidiary of the Company.

First Right of Refusal

Under the Sale and Purchase Agreement, the Vendor has granted to the Company the rights of first refusal for any investments by the Vendor and/or his Associates in the PRC (“Excluded PRC Companies”), which have been disclosed to the Purchaser on the date of the Sale and Purchase Agreement or will have been disclosed to the Purchaser in writing before the Completion Date, or such future investments which will have been notified to the Purchaser. The Vendor shall not (and he shall procure his Associates who are owners of equity interest in the Excluded PRC Companies not to) enter into any

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arrangement or agreement for the disposal of any of the equity interest in the Excluded PRC Company (collectively, the “Relevant Interests”), unless the Purchaser declines or deems to be declined to take up the Relevant Interests pursuant to the terms of the Sale and Purchase Agreement.

TERMS OF THE CONVERTIBLE BONDS

The terms of the Convertible Bonds have been negotiated on an arm’s length basis and the principal terms of which are summarised below:

Issuer

The Company

Principal amount

HK$2,200 million in aggregate, as to the Tranche 1 Bonds of HK$1,100 million and as to the Tranche 2 Bonds of HK$1,100 million

Interest

The Convertible Bonds shall accrue no interest.

Maturity Date

The 5th anniversary of the date of first issue of the Tranche 1 Bonds and the Tranche 2 Bonds respectively or, if that is not a Business Day, the first Business Day thereafter.

Conversion

The bondholder may at any time during the Conversion Period convert the whole or part (in multiples of HK$1 million) of the principal amount of the Convertible Bonds into new Shares at the Conversion Price, provided that (i) no conversion rights attached to the Convertible Bonds may be exercised, to the extent that following such exercise, a holder of the Convertible Bonds and parties acting in concert with it, taken together, will directly or indirectly, control or be interested in 30% or more of the entire issued Shares (or in such percentage of the issued share capital of the Company as may from time to time be specified in the Hong Kong Code on Takeovers and Mergers as being level for triggering a mandatory general offer); and (ii) no holder of the Convertible Bonds shall exercise the conversion right attached to the Convertible Bonds held by such holders if immediately after such conversion, the public float of the Shares fall below the minimum public float requirement stipulated under Rule 8.08 of the Listing Rules and as required by the Stock Exchange.

Taking into account the conversion restrictions set out above, the Acquisition involving the issue of the Conversion Shares will not result in change of control (as defined in the Hong Kong Code on Takeovers and Mergers) of the Company.

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The Company will comply with the relevant requirements that the Company will maintain the minimum public float requirements as under Rule 8.08 of the Listing Rules when the Convertible Bonds are converted.

Save for the redemption as provided in the Sale and Purchase Agreement due to adjustment of the Acquisition Price, any Convertible Bonds which remain outstanding by 4:00 p.m. on the maturity date shall be converted automatically into the Conversion Shares, provided that there will not be any automatic conversion of the Convertible Bonds on the maturity date, if such conversion will result in a bondholder and parties acting in concert with it, taken together, will directly or indirectly, control or be interested in 30% or more of the entire issued Shares.

Conversion Price

The Convertible Bonds shall be converted at the Conversion Price of HK$0.40 per Conversion Share, subject to adjustment as set out in the sub-paragraph headed “Adjustment to Conversion Price” below.

The Conversion Price of HK$0.40 per Conversion Share represents (i) a discount of approximately 19.19% to the closing price of HK$0.495 per Share as quoted on the Stock Exchange on the Last Trading Day; (ii) a discount approximately 19.84% to the average of the closing prices of approximately HK$0.499 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day; (iii) a discount of approximately 19.52% to the average of the closing prices of HK$0.497 per Share as quoted on the Stock Exchange for the last ten trading days up to and including the Last Trading Day; (iv) a discount of approximately 16.67% to the closing price of HK$0.480 per Share as quoted on the Stock Exchange as at the Latest Practicable Date; and (v) a discount of approximately 13.98% to the audited net assets of HK$0.465 per Share as at 31 December 2006.

Assuming exercise in full of the conversion rights attaching to the Convertible Bonds at the initial Conversion Price of HK$0.40 per Conversion Share by the bondholder, the Company will allot and issue an aggregate of 5,500 million new Shares, representing approximately (i) 1,150.81% of the existing issued share capital of the Company; and (ii) 92.01% of the issued share capital of the Company as enlarged by the exercise in full of the conversion rights attaching to the Convertible Bonds. The Conversion Shares will be issued pursuant to a specific mandate to be sought at the SGM.

Adjustment to the Conversion Price

The Conversion Price is subject to adjustment upon the occurrence of, among other matter, subdivision or consolidation of the Shares, capitalization issues, rights issues and the grant to the Shareholders of options, warrants or other rights to subscribe for or purchase any Shares, which adjustments shall where relevant, be certified by an approved merchant banker or the auditors of the Company.

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Ranking

The Conversion Shares, when allotted and issued, will rank pari passu in all respects with all existing Shares in issue on the date of allotment and issue of such Conversion Shares.

Transferability

The Convertible Bonds are freely transferable, provided that where the Convertible Bonds are intended to be transferable to a connected person (as defined in the Listing Rules) of the Company (other than the Associates of the bondholder) such transfer shall comply with the requirements under the Listing Rules and/or requirements imposed by the Stock Exchange, if any.

Voting rights

The Convertible Bonds do not confer any voting rights at any meetings of the Company.

Listing

The Convertible Bonds will not be listed on the Stock Exchange or any other stock exchange. Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

In view of the potential dilution effect upon exercise of the conversion rights attaching to the Convertible Bonds, the Company is required to disclose by way of announcement all relevant details of the conversion of the Convertible Bonds in the following manner:

(i) the Company will make a monthly announcement (“Monthly Announcement”) on the website of the Stock Exchange. Such announcement will be made on or before the fifth Business Day following the end of each calendar month and will include the following details in a table form:
(a) whether there is any conversion of the Convertible Bonds during the relevant month. If there is a conversion, details thereof including the conversion date, number of new Shares issued and conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;
(b) the amount of outstanding Convertible Bonds after the conversion, if any;

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(c) the total number of Shares issued pursuant to other transactions during the relevant month, including Shares issued pursuant to exercise of options under any share option scheme(s) of the Company; and
(d) the total issued share capital of the Company as at the commencement and the last day of the relevant month;
(ii) in addition to the Monthly Announcement, if the cumulative amount of the Conversion Shares issued pursuant to the conversion of the Convertible Bonds reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the website of the Stock Exchange including details as stated in (i) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be) up to the date on which the total amount of Shares issued pursuant to the conversion amounted to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Bonds (as the case may be); and
(iii) if the Company forms the view that any issue of Conversion Shares will trigger the disclosure requirements under Rule 13.09 of the Listing Rules, then the Company is obliged to make such disclosure regardless of the issue of any announcements in relation to the Convertible Bonds as mentioned in (i) and (ii) above.

PROMISSORY NOTE

At the option of the Purchaser, HK$100 million of each of the First Acquisition Price and the Second Acquisition Price may be satisfied by the issue of the Promissory Note by the Purchaser to the Vendor (or its nominee(s)).

The principal terms of the Promissory Note are as follows:

Issuer: The Purchaser Principal amount: HK$100 million in respect of the First Acquisition HK$100 million in respect of the Second Acquisition Maturity: 12 months from the date of issue of the Promissory Note Transferability: The Promissory Note is transferable. Coupon rate: Zero

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Security:

No security will be provided by the Purchaser (as issuer of the Promissory Note) in respect of its obligations under the Promissory Note.

Repayment:

At the sole discretion of the Purchaser, the Promissory Note or such part thereof may be repaid earlier. Otherwise, the principal amount of the Promissory Note is to be repaid upon its maturity.

INFORMATION ON THE TARGET GROUP

The First Target Company is an investment holding company incorporated in the British Virgin Islands on 28 November 2007 and is beneficially interested in the entire issued share capital of each of the First HK Company and the HK Subsidiary. The First HK Company was a company incorporated in Hong Kong on 26 January 2005 and the HK Subsidiary was incorporated in Hong Kong on 7 November 2007. The First Target Group is principally engaged in trading of coal business, which also holds certain office premises in Hong Kong for lease as well as for self-occupation.

The Second Target Company is an investment holding company incorporated in the British Virgin Islands on 20 September 2007. By an agreement dated 11 January 2008 (“Preliminary Reorganisation Agreement”) and made between the Second HK Company and the Vendor, the following reorganisation (“Reorganisation”) has been or will be carried out:

(i) before 31 May 2008, the Vendor shall procure the Coal-related Ancillary Businesses of (aa) coal washing, electric power generation and transport services in respect of coal and other ancillary materials supplied by or to a business partner in the PRC (such business partner will hold 9% equity interest in the PRC Subsidiary); and (bb) generation of heat being supplied to an Independent Third Party and the related assets and liabilities (the net tangible asset value of which shall not be less than RMB400 million (the “Fixed Assets”)) will become vested in the PRC Subsidiaries;
(ii) following steps set out in (i) above, the Second HK Company will hold 90% of the registered capital in the PRC Subsidiaries;
(iii) immediately before the Completion, the loans owing by the Second Group Companies to the Vendor’s Associates will be assigned to become loans owing by the Second Target Company to the Vendor; and

all the above steps under the Reorganisation shall be consummated on or before the Second Completion.

It is understood from the Vendor that the Coal-related Ancillary Businesses would comprise mainly the Fixed Assets which are currently held by 金岩電力煤化有限公司 (the “Golden Rock Group”) or its subsidiaries. Furthermore, it is envisaged that the Reorganisation would involve acquisition of the Fixed Assets, but not equity interests of companies held by the Golden Rock Group.

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According to the Valuation Report on the Coal-related Ancillary Business in Appendix VI to this circular, the fair market value was estimated to be approximately RMB414,900,000 (equivalent to approximately HK$413,946,000 (exchange rate: HK$0.9977 = RMB1.00 as at 31 December 2006) in accordance to the pro forma financial report of the Huscoke Group as set out in Appendix III to this circular). Details of the Fixed Assets are set out in Financial Information on the Acquired Plants and Machineries under Appendix III to this circular.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendor did not have any interest in the Golden Rock Group preceding the Acquisition.

The corporate structure of the First Target Group and the Second Target Group before and after the Reorganisation and at Completion are set out below:

At the date of signing the Sale and Purchase Agreement

==> picture [284 x 238] intentionally omitted <==

----- Start of picture text -----

The Vendor
100%
The First Target Company The Second Target Company
100% 100%
The First HK Company The Second HK Company
100%
The HK Subsidiary
----- End of picture text -----

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After the Reorganisation, assuming the Acquisition is not yet completed

==> picture [290 x 318] intentionally omitted <==

----- Start of picture text -----

The Vendor
100%
The First Target Company The Second Target Company
100% 100%
The First HK Company The Second HK Company
100% 90%
The HK Subsidiary The PRC Subsidiaries
The Coal-related
Ancillary Businesses
----- End of picture text -----

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After the First Completion and the Second Completion

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----- Start of picture text -----

The Company
100%
The Purchaser
100%
The First Target Company The Second Target Company
100% 100%
The First HK Company The Second HK Company
100% 90%
The HK Subsidiary The PRC Subsidiaries
The Coal-related
Ancillary Businesses
----- End of picture text -----

According to the audited accountants’ report which prepared in accordance with Hong Kong Financial Reporting Standards for the three financial years ended 31 December 2007 as set out in Appendix II to this circular, the First Target Group recorded an audited net loss of approximately HK$73,000, HK$292,000, and HK$1,200,000 for the period ended 31 December 2005 and for the year ended 31 December 2006 and 31 December 2007 respectively. The audited net liabilities of the First Target Group amounted to approximately HK$15.63 million.

In preparing the accountants’ report on the plants and machineries, it is based on an acquisition of any revenue-generating assets (other than a business or company) with an identification income stream or assets valuation in accordance with Rule 14.67(4)(b)(ii). As shown in the Financial Information on the Acquired Plants and Machineries as set out in Appendix III to this circular, the profit before tax derived from the proposed acquired plants and machineries for the three financial years ended 31 December 2005, 31 December 2006 and 31 December 2007 were approximately RMB29,259,000, RMB5,796,000 and RMB4,806,000 respectively.

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Given the date of incorporation of each of the First Target Company and the Second Target Company were on 28 November 2007 and 20 September 2007 respectively and the asset value showing in its respective record as at 31 December 2007 of approximately HK$7.80 and HK$7.80 respectively, representing its issued share capital of each of the company, are immaterial and have no material effect to the financial position of First Target Group and Second Target Group. The Second HK Company, which had HK$10,000 issued share capital as at 31 January 2008, was incorporated after the date of the accountants’ reports for the purpose of inclusion into this circular. As such, the Directors consider that, to economize the cost of the Acquisition, the accountants’ report of the First Target Company, the Second Target Company and the Second HK Company will not be prepared and not be consolidated into the Accountants’ Report on Huscoke Group and the Pro Forma Financial Information on the Enlarged Group I, II and III under the Appendices II and IV to this circular.

Other than the entering into of the Preliminary Reorganisation Agreement, the Second Target Company has not conducted any businesses since its incorporation.

REASONS FOR THE PROPOSED ACQUISITION

The Group is principally engaged in the design, manufacture and sale of a diversified range of consumer home products. For the six months ended 30 June 2007, the Group recorded an unaudited loss of approximately HK$19.2 million as compared to a profit of approximately HK$6.3 million for the same period in year 2006. The loss was mainly due to stagnant sales and the persisting high levels of production cost as a result of fluctuating raw materials prices. The Directors consider that demand for household products slackened while competition was fierce that resulted in intense pressure on profit margins.

According to the US Energy Information Administration (the “EIA”), world coal consumption increases by 74% and international coal trade increases by 44% over the projection period from 2004 to 2030, while coal’s share of world energy consumption increases from 26% in 2004 to 28% in 2030. According to EIA, coal is the second-largest fuel source of energy-related carbon dioxide emissions behind oil, accounting for 39% of the world total in 2004 and it is projected to become the largest source by 2010. Furthermore, China and India together account for 72% of the projected increase in world coal consumption from 2004 to 2030 as strong economic growth is projected for both countries and much of the increase in their demand for energy is expected to be met by coal. Moreover, international traded coal made up 15% of total world consumption in 2004 and world trade coal is projected to grow at an average annual rate of 1.5%.

In view of the above, the Directors consider that the Acquisition represents an opportunity for the Group to diversify into the prosperous coal business and broaden its revenue base. The Directors currently have no intention to change the existing principal business of the Group. Save for the Company may invite person(s) who has substantial experience in the Coal-related Ancillary Businesses joining the Board to participate in the management of the newly acquired business, there will not be change in control of the Company as a result of the Acquisition. The Board is of the view that the terms and conditions of the Acquisition are fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.

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FINANCIAL EFFECTS OF THE ACQUISITION ON THE GROUP

Financial effect of first acquisition

Prior to First Acquisition, the Company does not hold any interest in the First Target Company. Upon the completion of First Acquisition, the Company will directly and beneficially own 100% of the equity interest in the First Target Company and its subsidiaries. According to the accounting policies of the Group, First Target Group will be treated as indirect wholly-owned subsidiaries of the Company and its financial results will be consolidated into the Group.

Earnings

The Group recorded an audited consolidated profit attributable to the equity holders of the Company of approximately HK$17 million for the year ended 31 December 2006. According to the unaudited pro forma financial information on the Enlarged Group I set out in Appendix IV to this circular, the unaudited consolidated loss attributable to the equity holders of the Enlarged Group I would be approximately HK$64 million after the completion of First Acquisition and the pro forma basic earnings per share will be approximately HK13.89 cents being the pro forma net profit of the Enlarged Group I divided by the total weighted average number of ordinary shares issued.

Assets

As at 31 December 2006, the audited total assets of the Group were approximately HK$394 million. As set out in the unaudited pro forma balance sheet of the Enlarged Group I set out in Appendix IV to this circular, the unaudited pro forma total assets of the Enlarged Group I would be increased by approximately HK$1,337 million to approximately HK$1,731 million, where the unaudited pro forma net assets of the Enlarged Group I would be approximately HK$444 million and turned to net tangible liabilities (total assets less goodwill less total liabilities) of approximately HK$749 million. The increase in unaudited total assets is mainly attributable to the net effect of increase in goodwill arising from First Acquisition of approximately HK$1,192 million and decrease in cash and bank balances of approximately HK$100 million arising from First Acquisition.

Goodwill of approximately HK$1,192 million arising from First Acquisition, which is derived from the consideration of HK$1,200 million minus the fair value of 100% interest in the net assets of Pride Eagle Group acquired which amounted to approximately HK$8 million as at 31 December 2006. The positive goodwill would be recognised in the consolidated balance sheet.

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Liabilities

The Directors are of the view that there would not be any material capital commitment nor contingent liability arising from First Acquisition that will have material adverse impact on the financial position of the Group immediately after the completion of First Acquisition.

Financial effect of second acquisition

Prior to Second Acquisition, the Company does not hold any interest in the Second Target Company. Upon the completion of Second Acquisition, the Company will directly and beneficially own 100% of the equity interest in the Second Target Group. According to the accounting policies of the Group, the Second Target Group will be treated as indirect wholly-owned subsidiaries of the Company and its financial results will be consolidated into the Group.

Earnings

The Group recorded an audited consolidated profit attributable to the equity holders of the Company of approximately HK$17 million for the year ended 31 December 2006. According to the unaudited pro forma financial information on the Enlarged Group II set out in Appendix IV to this circular, the unaudited consolidated loss attributable to the equity holders of the Enlarged Group II would be approximately HK$76 million after the completion of Second Acquisition and the pro forma basic loss per share will be approximately HK15.52 cents being the pro forma net loss of the Enlarged Group II divided by the total weighted average number of ordinary shares issued.

Assets

As at 31 December 2006, the audited total assets of the Group were approximately HK$394 million. As set out in the unaudited pro forma balance sheet of the Enlarged Group II set out in Appendix IV to this circular, the unaudited pro forma total assets of the Enlarged Group II would be increased by approximately HK$1,142 million to approximately HK$1,536 million, where the unaudited pro forma net assets of the Enlarged Group II would be approximately HK$486 million and turned to net tangible liabilities assets (total assets less goodwill less total liabilities) of approximately HK$336 million. The increase in unaudited total assets is mainly attributable to the net effect of increase in property, plant and equipment of

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approximately HK$420 million, increase in goodwill of approximately HK$822 million and decreases in cash and bank balances of approximately HK$100 million arising from Second Acquisition.

Goodwill of approximately HK$822 million arising from Second Acquisition, which is derived from the consideration of HK$1,200 million minus the fair value of 100% interest in the net assets of Joy Wisdom Group acquired which amounted to approximately HK$378 million as at 31 December 2006. The positive goodwill would be recognised in the consolidated balance sheet.

Liabilities

The Group recorded audited consolidated total liabilities of approximately HK$172 million as at 31 December 2006. As set out in the pro forma consolidated balance sheet of the Enlarged Group II set out in Appendix IV to this circular, the unaudited pro forma total liabilities of the Enlarged Group II would be increased by approximately HK$878 million to approximately HK$1,050 million. The increase is mainly attributable to the issuance of Tranche II Bond of approximately HK$832 million and the deferred tax liabilities of approximately HK$47 million. The Directors are of the view that there would not be any material capital commitment nor contingent liability arising from Second Acquisition that will have material adverse impact on the financial position of the Group immediately after the completion of Second Acquisition.

Financial effect of both first acquisition and second acquisition

Prior to First Acquisition and Second Acquisition, the Company does not hold any interest in Pride Eagle Group and Joy Wisdom Group. Upon the completion of First Acquisition and Second Acquisition, the Company will directly and beneficially own 100% of the equity interest in both the First Target Group and the Second Target Group. According to the accounting policies of the Group, the First Target Group and the Second Target Group will be treated as indirect wholly-owned subsidiaries of the Company and their financial results will be consolidated into the Group.

Earnings

The Group recorded an audited consolidated profit attributable to the equity holders of the Company of approximately HK$17 million for the year ended 31 December 2006. According to the unaudited pro forma financial information on the Enlarged Group III set out in Appendix IV to this circular, the unaudited consolidated loss attributable to the equity holders of the Enlarged Group III would be approximately HK$29 million after the completion of First Acquisition and Second Acquisition and the pro forma basic loss per share will be approximately HK5.58 cents being the pro forma net loss of the Enlarged Group III divided by the total weighted average number of ordinary shares issued.

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Assets

As at 31 December 2006, the audited total assets of the Group were approximately HK$394 million. As set out in the unaudited pro forma balance sheet of the Enlarged Group III set out in Appendix IV to this circular, the unaudited pro forma total assets of the Enlarged Group III would be increased by approximately HK$2,478 million to approximately HK$2,872 million, where the unaudited pro forma net assets of the Enlarged Group III would be approximately HK$707 million and turned to net tangible liabilities (total assets less goodwill less total liabilities) of approximately HK$1,308 million. The increase in unaudited total assets is mainly attributable to the net effect of increase in property, plant and equipment of approximately HK$435 million, increase in goodwill of approximately HK$2,014 million and decrease in cash and bank balances of approximately HK$200 million arising from First Acquisition and Second Acquisition.

Goodwill of approximately HK$2,014 million arising from First Acquisition and Second Acquisition, which is derived from the consideration of HK$2,400 million minus the fair value of 100% interest in the net assets of Pride Eagle Group and Joy Wisdom Group acquired which amounted to approximately HK$386 million as at 31 December 2006. The positive goodwill would be recognised in the consolidated balance sheet.

Liabilities

The Group recorded audited consolidated total liabilities of approximately HK$172 million as at 31 December 2006. As set out in the pro forma consolidated balance sheet of the Enlarged Group III set out in Appendix IV to this circular, the unaudited pro forma total liabilities of the Enlarged Group III would be increased by approximately HK$1,994 million to approximately HK$2,166 million. The increase is mainly attributable to the issuance of Tranche I Bond and Tranche II Bond of approximately HK$832 million each and the deferred tax liabilities of approximately HK$94 million.

The Directors are of the view that there would not be any material capital commitment nor contingent liability arising from First Acquisition and Second Acquisition that will have material adverse impact on the financial position of the Group immediately after the completion of First Acquisition and Second Acquisition.

– 29 –

LETTER FROM THE BOARD

FINANCIAL AND TRADING PROSPECTS

Upon completion of the Acquisition, the Group will be engaged in trading of coal, coal washing, electric power generation and transport services in respect of coal and other ancillary materials and generation of heat in the PRC. As the existing management of the Group does not have the relevant experience and expertise in operating the Coal-related Ancillary Businesses, it is expected that the existing personnel will be retained for the daily operation of the Target Group, and where appropriate, suitable new personnel will be recruited in the future. The Company may also invite person(s) who has substantial experience in Coal-related Ancillary Businesses joining the Board to participate in the management of the newly acquired business. With the existing clienteles as well as the existing revenue base of the Target Group, the Directors believe that the Group will be able to widen its source of income by diversifying its business into prospective energy related business and improving the Group’s profitability by broadening its business scope.

In view of the increase in demand for coal around the world, the Directors are optimistic about the performance of the Group as the Group’s investment in the coalrelated business is expected to improve the Group’s profitability, sustain its growth momentum, and broaden the revenue stream of the Group.

Accordingly, the Company will focus, including the corporate resources, on the development of the Coal-related Ancillary Businesses while the Company will continue to operate its business of design, manufacture and sale of consumer home products to maintain stable income stream to the Group.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the Latest Practicable Date, the authorised share capital of the Company is HK$100 million (divided into 1,000 million Shares), of which 477,926,292 Shares were issued and fully paid or credited as fully paid. The number of Shares which the Company may issue and allot under the existing authorised share capital of 522,073,708 Shares is insufficient to issue of the Conversions Shares, if the conversion right attached thereto is exercised in full. In order to accommodate the allotment and issue of the Conversion Shares (upon conversion of the Convertible Bonds pursuant to the Sale and Purchase Agreement), the Directors propose that the existing authorised share capital of the Company to be increased to HK$1,000 million (divided into 10,000 million Shares) by creating an additional 9,000 million Shares, which will be put to Shareholders’ approval at the SGM.

– 30 –

LETTER FROM THE BOARD

Set out below is the shareholding structure of the Company as at the Latest Practicable Date, and for illustrative purpose, the effects on the shareholding structure of the Company assuming full conversion of the Convertible Bonds:

As at the Latest Practicable Date Shares % Golden Mount Limited (Note 1) 129,097,209 27.01 Lam Po Kwai, Frankie (Note 2) 44,412,844 9.29 Solidpole Limited (Note 3) 34,855,428 7.29 The Vendor – 0.00 Public Shareholders 269,560,811 56.41 Total 477,926,292 100.00	Assuming full conversion of the Tranche 1 Bonds (Note 4) Shares % 129,097,209 4.00 44,412,844 1.38 34,855,428 1.08 2,750,000,000 85.19 269,560,811 8.35 3,227,926,292 100.00	Assuming conversion of the Convertible Bonds to the extent immediately before the Vendor would be interested in 30% of the then issued share capital of the Company based on the number Assuming of issued Shares full conversion of as at the Latest the Tranche 2 Bonds Practicable Date (Note 4) Shares % Shares % 129,097,209 2.16 129,097,209 18.91 44,412,844 0.74 44,412,844 6.51 34,855,428 0.58 34,855,428 5.11 5,500,000,000 92.01 204,728,032 29.99 269,560,811 4.51 269,560,811 39.48 5,977,926,292 100.00 682,654,324 100.00	Assuming conversion of the Convertible Bonds to the extent immediately before the Vendor would be interested in 30% of the then issued share capital of the Company based on the number Assuming of issued Shares full conversion of as at the Latest the Tranche 2 Bonds Practicable Date (Note 4) Shares % Shares % 129,097,209 2.16 129,097,209 18.91 44,412,844 0.74 44,412,844 6.51 34,855,428 0.58 34,855,428 5.11 5,500,000,000 92.01 204,728,032 29.99 269,560,811 4.51 269,560,811 39.48 5,977,926,292 100.00 682,654,324 100.00
			100.00

Notes:

(1) Golden Mount Limited is owned by Mr. Chim Pui Chung who is the father of Mr. Chim Kim Lun, Ricky, a Director.

(2) Mr. Lam Po Kwai Frankie is a Director.

– 31 –

LETTER FROM THE BOARD

(3) Solidpole Ltd. is a wholly-owned subsidiary of China Everbright Ltd. which is in turn a 55.47% owned subsidary of Honorich Holdings Ltd.. Honorich Holdings Ltd. is a wholly-owned subsidiary of Datten Investments Ltd which in turn a wholly-owned subsidiary of China Everbright Holdings Company Ltd.
(4) These columns are shown for illustrative purpose only. Pursuant to the Sale and Purchase Agreement, the Vendor shall not exercise any right to convert the Convertible Bonds into the Conversion Shares to the extent that following such exercise, the Vendor, and parties acting in concert with him, taken together, will directly or indirectly, control or be interested in 30% or more of the entire issued Shares or in such lower percentage as may from time to time be specified in the Hong Kong Code on Takeovers and Mergers as being the level for triggering a mandatory general offer and no holder of the Convertible Bonds shall exercise the conversion right attached to the Convertible Bonds held by such holder if immediately after such conversion, the public float of the Shares falls below the minimum public float requirements stipulated under Rule 8.08 of the Listing rules and as required by the Stock Exchange. The Company will comply with the relevant requirements and maintain the minimum public float requirements as under Rule 8.08 of the Listing Rules when the Convertible Bonds are exercised.

IMPLICATION FROM THE LISTING RULES

The Acquisition constitutes a very substantial acquisition on the part of the Company under Chapter 14 of the Listing Rules, and is therefore subject to the reporting, announcement and Shareholders’ approval requirements. To the best knowledge of the Directors as at the Latest Practicable Date, no Shareholder has any interests in the Acquisition, it is therefore not expected any Shareholder will be required to abstain from voting for the approval of the Acquisition and the transactions contemplated thereunder at the SGM. The proposed increase in authorised share capital of the Company will also be put to Shareholders’ approval at the SGM.

SGM

A notice convening the SGM is set out on pages 216 to 218 of this circular. The SGM will be convened and held at the Board Room, 1st Floor, The Aberdeen Marine Club, 8 Shum Wan Road, Aberdeen, Hong Kong on Monday, 7 April 2008 at 10:30 a.m. at which resolutions will be proposed to Shareholders to consider, if thought fit, to approve the Sale and Purchase Agreement and all transactions contemplated thereunder and to increase the authorised share capital of the Company.

Form of proxy for use in the SGM is enclosed. Whether or not you propose to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting thereof, should you so desire.

– 32 –

LETTER FROM THE BOARD

PROCEDURE FOR DEMANDING A POLL

Pursuant to Bye-Law 70 of the Bye-Laws, a resolution put to the vote of a meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

(i) by the chairman of the meeting; or
(ii) by at least three members present in person or by a duly authorised corporate representative or by proxy for the time being entitled to vote at the meeting; or
(iii) by any member or members present in person or by a duly authorised corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or
(iv) by any member or members present in person or by a duly authorised corporate representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring the right.

Unless a poll be so demanded and not withdrawn, a declaration by the Chairman that a resolution has on a show of hands been carried or carries unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceeding of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution.

RECOMMENDATION

The Directors consider that (i) the proposed increase in authorized share capital; and (ii) the terms and conditions of the Sale and Purchase Agreement are fair and reasonable and are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the increase in authorized share capital of the Company and the Sale and Purchase Agreement and all the transactions contemplated thereunder.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Your faithfully,

For and on behalf of the Board of

FRANKIE DOMINION INTERNATIONAL LIMITED Lam Po Kwai, Frankie Chairman

– 33 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP FOR EACH OF THE THREE YEARS ENDED 31 DECEMBER 2004, 2005 AND 2006

The following is a summary of the consolidated financial information of the Group for each of the three years ended 31 December 2004, 2005 and 2006 as extracted from the annual reports of the Company and the unaudited consolidated results of the Group for the six months ended 30 June 2007 as extracted from the interim report of the Company:

Results

For the six months ended 30 June 2007 HK$’000 Revenue 291,366 (Loss)/Profit before tax (19,232) Taxation (charge) credit (7) (Loss)/Profit for the year (19,239) Attributable to: Equity holders of the Company (19,239) Minority Interests – (19,239) Dividends –	Year ended 31 December 2006 2005 2004 HK$’000 HK$’000 HK$’000 714,731 747,483 887,025 16,059 (17,570) (2,122) 914 (987) 1,716 16,973 (18,557) (406) 18,912 (13,031) 3,031 (1,939) (5,526) (3,437) 16,973 (18,557) (406) – – 9,558

Assets, liabilities and minority interests

Total assets Total liabilities Minority interests	As at 30 June 2007 HK$’000 357,410 (153,603) – 203,807	As at 31 December 2006 2005 2004 HK$’000 HK$’000 HK$’000 394,002 424,882 437,115 (171,760) (180,312) (166,350) – 41,411 52,860 222,242 244,570 270,765

None of the audited financial statements of the Group for the three years ended 31 December 2006 was qualified by the auditors.

– 34 –

APPENDIX I FINANCIAL INFORMATION ON THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR EACH OF THE TWO YEARS ENDED 31 DECEMBER 2005 AND 2006

The following is extracted the text of the audited financial statements of the Group together with the accompanying notes contained on pages 25 to 65 of the annual report of the Company for the year ended 31 December 2006.

CONSOLIDATED INCOME STATEMENT

For the year ended 31st December, 2006

NOTES Revenue Cost of sales Gross profit Other income 6 Distribution costs Administrative expenses Gain on disposal of an associate Impairment losses on property, plant and equipment Loss on disposal of a subsidiary 28 Change in fair value of investments held for trading Discount on acquisition of additional interests in a subsidiary 7 Finance costs 8 Share of profits (losses) of associates Profit (loss) before taxation Taxation credit (charge) 9 Profit (loss) for the year 10 Attributable to: Equity holders of the Company Minority interests Dividends 13 Basic earnings (loss) per share 14	2006 HK$ 714,731,279 (645,465,503) 69,265,776 9,432,183 (24,636,777) (60,641,282) 66,135 – – (117,148) 28,222,523 (5,792,712) 260,696 16,059,394 913,536 16,972,930 18,911,884 (1,938,954) 16,972,930 – 3.96 cents	2005 HK$ 747,483,024 (675,117,988) 72,365,036 5,237,514 (27,750,401) (59,255,288) – (1,378,241) (1,332,358) 10,323 – (5,275,635) (190,674) (17,569,724) (987,313) (18,557,037) (13,030,909) (5,526,128) (18,557,037) – (2.73)cents

– 35 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED BALANCE SHEET

At 31st December, 2006

NOTES Non-current assets Property, plant and equipment 15 Prepaid lease payments 16 Interests in associates 17 Available-for-sale investment 18 Long term bank deposits 20 Current assets Inventories 19 Debtors, bills receivable and prepayments 20 Prepaid lease payments 16 Investments held for trading 21 Tax recoverable Short term bank deposits 20 Short term pledged bank deposits 22 Bank balances and cash 20 Current liabilities Creditors, bills payable and accrued charges 23 Amount due to an associate 17 Bank borrowings 24 Net current assets	2006 HK$ 114,944,655 22,019,155 314,591 880,000 – 138,158,401 67,563,136 92,810,269 626,880 8,630,365 1,949,071 39,504,927 2,840,002 41,918,748 255,843,398 96,751,084 294,000 70,028,856 167,073,940 88,769,458 226,927,859	2005 HK$ 129,064,718 22,473,693 1,907,394 880,000 15,600,000
		169,925,805
		66,976,544 90,000,221 620,674 3,138,735 2,017,446 31,885,221 2,740,862 57,576,588
		254,956,291
		92,035,461 294,000 82,315,903
		174,645,364
		80,310,927
		250,236,732

– 36 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES Capital and reserves Share capital 25 Reserves Equity attributable to equity holders of the Company Minority interests Total equity Non-current liability Deferred taxation 27	2006 HK$ 47,792,629 174,449,340 222,241,969 – 222,241,969 4,685,890 226,927,859	2005 HK$ 47,792,629 155,365,953
		203,158,582 41,411,477
		244,570,059 5,666,673
		250,236,732

– 37 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31st December, 2006

Attributable to equity holders of the Company

Share capital HK$ At 1st January, 2005 47,792,629 Exchange differences arising on translation of foreign operation – Share of changes in equity of associates – Net income recognised directly in equity – Loss for the year – Total recognised income and expenses for the year – Elimination of minority interests upon disposal of a subsidiary – Dividend paid by a subsidiary – Final dividend for 2004 paid – At 31st December, 2005 47,792,629 Exchange differences arising on translation of foreign operation and net income recognised directly in equity – Release of translation reserve upon disposal of an associate – Profit (loss) for the year – Total recognised income for the year 47,792,629 Acquisition of additional interest in a subsidiary – At 31st December, 2006 47,792,629	Share premium HK$ 144,997,035 – – – – – – – – 144,997,035 – – – 144,997,035 – 144,997,035	Special reserve HK$ 18,236,237 – – – – – – – – 18,236,237 – – – 18,236,237 – 18,236,237	Translation reserve HK$ 2,756,203 624,736 48,912 673,648 – 673,648 – – – 3,429,851 426,137 (254,634 ) – 3,601,354 – 3,601,354	Capital redemption reserve HK$ 85,000 – – – – – – – – 85,000 – – – 85,000 – 85,000	Retained profits (accumulated loss) HK$ 4,038,371 – – – (13,030,909 ) (13,030,909 ) – – (2,389,632 ) (11,382,170 ) – – 18,911,884 7,529,714 – 7,529,714	Total HK$ 217,905,475 624,736 48,912 673,648 (13,030,909 ) (12,357,261 ) – – (2,389,632 ) 203,158,582 426,137 (254,634 ) 18,911,884 222,241,969 – 222,241,969	Minority interests HK$ 52,860,220 – – – (5,526,128 ) (5,526,128 ) (2,170,290 ) (3,752,325 ) – 41,411,477 – – (1,938,954 ) 39,472,523 (39,472,523 ) –	Total HK$ 270,765,695 624,736 48,912 673,648 (18,557,037 ) (17,883,389 ) (2,170,290 ) (3,752,325 ) (2,389,632 ) 244,570,059 426,137 (254,634 ) 16,972,930 261,714,492 (39,472,523 ) 222,241,969

The special reserve represents the difference between the nominal value of the shares of the subsidiaries at the date when the shares were acquired by the Company and the nominal amount of the Company’s shares issued for the acquisition.

– 38 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31st December, 2006

OPERATING ACTIVITIES Profit (loss) before taxation Adjustments for: Share of (profits) losses of associates Release of prepaid lease payments Depreciation of property, plant and equipment Gain on disposal of an associate (Gain) loss on disposal of property, plant and equipment Loss on disposal of a subsidiary Discount on acquisition of additional interests in a subsidiary Allowances for bad and doubtful debts Write back of allowance on inventories Impairment losses on property, plant and equipment Interest expense Change in fair value of investments held for trading Interest income Operating cash flows before movements in working capital (Increase) decrease in inventories Increase in debtors, bills receivable and prepayments Decrease in amount due from an associate Increase in creditors, bills payable and accrued charges Increase in amount due to an associate Cash generated from operations Hong Kong Profits Tax refund (paid) NET CASH FROM OPERATING ACTIVITIES	2006 HK$ 16,059,394 (260,696) 622,308 17,897,189 (66,135) (318,406) – (28,222,523) 2,303,865 – – 5,792,712 117,148 (2,386,806) 11,538,050 (586,592) (5,904,791) – 4,695,563 – 9,742,230 1,128 9,743,358	2005 HK$ (17,569,724) 190,674 539,594 20,812,233 – 62,074 1,332,358 – 26,122 (556,232) 1,378,241 5,275,635 (10,323) (1,661,700) 9,818,952 9,372,491 (18,840,057) 516,165 13,228,377 294,000 14,389,928 (556,893) 13,833,035

– 39 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES INVESTING ACTIVITIES Decrease in bank deposits Purchase of investments held for trading Purchase of property, plant and equipment Acquisition of additional interest in a subsidiary Increase in prepaid lease payments Increase in pledged bank deposits Proceeds from disposal of an associate Proceeds from disposal of investments held for trading Proceeds from disposals of property, plant and equipment Disposal of a subsidiary 28 Interest received NET CASH FROM INVESTING ACTIVITIES FINANCING ACTIVITIES New bank borrowings raised Repayment of bank borrowings Dividends paid Dividend paid to a minority shareholder of a subsidiary Interest paid NET CASH USED IN FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS BEING: Short term bank deposits Bank balances and cash	2006 HK$ 15,600,000 (5,732,835) (9,346,111) (11,250,000) – (99,140) 532,800 124,057 6,159,612 1,923,078 2,386,806 298,267 432,926,196 (445,213,243) – – (5,792,712) (18,079,759) (8,038,134) 89,461,809 81,423,675 39,504,927 41,918,748 81,423,675	2005 HK$ 23,400,000 (2,746,146) (14,231,876) – (744,567) (43,121) – 2,231,793 1,759,040 (847,923) 1,661,700 10,438,900 583,933,401 (582,484,410) (2,389,632) (3,752,325) (5,275,635) (9,968,601) 14,303,334 75,158,475 89,461,809 31,885,221 57,576,588 89,461,809

– 40 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31st December, 2006

1. GENERAL

The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The consolidated financial statements are presented in Hong Kong dollars, which is the same as the functional currency of the Company.

The Company is an investment holding company. Its subsidiaries are principally engaged in the design, manufacture and sale of a diversified range of consumer home products.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

In the current year, the Group has applied, for the first time, a number of new standard, amendments and interpretations (“new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which are either effective for accounting periods beginning on or after 1st December, 2005 or 1st January, 2006. The adoption of the new HKFRSs has no material impact on the results and financial position of the Group for both years. Accordingly, no prior period adjustment has been required.

The Group has not early applied the following new standards, amendment or interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of these standards, amendment or interpretations will have no material impact on the results and the financial position of the Group.

HKAS 1 (Amendment) Capital disclosures[1] HKFRS 7 Financial instruments: Disclosures[1] HKFRS 8 Operating segments[2] HK(IFRIC)-INT 7 Applying the restatement approach under HKAS 29 Financial Reporting in Hyperinflationary Economies[3] HK(IFRIC)-INT 8 Scope of HKFRS 2[4] HK(IFRIC)-INT 9 Reassessment of embedded derivatives[5] HK(IFRIC)-INT 10 Interim financial reporting and impairment[6] HK(IFRIC)-INT 11 HKFRS 2: Group and treasury share transactions[7] HK(IFRIC)-INT 12 Service concession arrangements[8]

1 Effective for annual periods beginning on or after 1st January, 2007.
2 Effective for annual periods beginning on or after 1st January, 2009.
3 Effective for annual periods beginning on or after 1st March, 2006.
4 Effective for annual periods beginning on or after 1st May, 2006.
5 Effective for annual periods beginning on or after 1st June, 2006.
6 Effective for annual periods beginning on or after 1st November, 2006.
7 Effective for annual periods beginning on or after 1st March, 2007.
8 Effective for annual periods beginning on or after 1st January, 2008.

– 41 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below.

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Companies Ordinance.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

On acquisition of additional interest in subsidiaries, goodwill was calculated as the difference between the consideration paid for the additional interest and the carrying amount of the net assets of the subsidiaries attributable to the additional interest acquired. If the Group’s additional interest in the net assets of the subsidiaries exceeds the consideration paid for the additional interest, the excess is recognised in the consolidated income statement.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 Business Combinations are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

– 42 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Investments in associates

An associate is an entity over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any identified impairment loss. When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. An additional share of losses is provided for and a liability is recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts.

Sales of goods are recognised when goods are delivered and title has passed.

Service income are recognised when services are provided.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent accumulated depreciation and accumulated impairment loss.

Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year in which the item is derecognised.

– 43 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straightline basis.

Leasehold land and building

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification, leasehold land which title is not expected to pass to the lessee by the end of the lease term is classified as an operating lease unless the lease payments cannot be allocated reliably between the land and building elements, in which case, the entire lease is classified as a finance lease.

Foreign currencies

In preparing the consolidated financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the year in which they arise, except for exchange differences arising on a monetary item that forms part of the Company’s net investment in a foreign operation, in which case, such exchange differences are recognised in equity in the consolidated financials statements.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the year, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised in profit or loss in the year in which the foreign operation is disposed of.

Retirement benefit costs

Payments to defined contribution retirement benefit plans, the Mandatory Provident Fund Scheme and the state-managed retirement benefit schemes, are charged as an expense when employees have rendered service entitling them to the contributions.

Borrowing costs

All borrowing costs are recognised as and included in finance costs in the consolidated income statement in the period in which they are incurred.

– 44 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax base used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets are classified into one of the three categories, including financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of each category of financial assets are set out below.

– 45 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss represent financial assets held for trading. The Group classified certain financial assets as investments held for trading. At each balance sheet date subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with changes in fair value recognised directly in profit or loss in the year in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including debtors, bill receivables, bank balances and bank deposits) are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognised in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss. Any impairment losses on available-for-sale financial assets are recognised in profit or loss. For available-for-sale debt investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

Financial liabilities

Financial liabilities including creditors, bills payable, amount due to an associate and bank borrowings are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

– 46 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

4. FINANCIAL INSTRUMENTS

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

Impairment losses

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Financial risk management objectives and policies

The Group’s major financial instruments include debtors, bills receivable, bank balance and bank deposits, investments held-for-trading, creditors, bills payable, amount due to an associate and bank borrowings. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

Currency risk

Several subsidiaries of the Group have foreign currency sales/purchases denominated in currencies other than the functional currencies of the relevant group entities, which exposed the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

Cash flow interest rate risk

The Group is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing financial assets and liabilities. Interest bearing financial assets are mainly deposits with banks. Interest bearing financial liabilities are mainly bank borrowings. The Group does not have interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

– 47 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Fair value interest rate risk

The Group’s fair value interest rate risk relates primarily to fixed-rate bank balances and shortterm bank deposits from financial institution. The Group does not have interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

Credit risk

The Group’s maximum exposure to credit risk in the event of the counterparties failure to perform their obligations as at 31st December, 2006 in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the consolidated balance sheet. In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits and credit period, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. The management closely monitors the subsequent settlement of the debtors and does not grant long credit period to customers. In addition, the Group reviews the recoverable amount of each individual trade debtors at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The Group has no significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

The credit risk on liquid funds is limited because the counterparties are banks with high creditratings assigned by international credit-rating agencies.

Fair value

The fair value of financial assets and financial liabilities are determined as follows:

the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions; and
the fair value of available-for-sale investments is determined by reference to the bid price quoted in a second hand market. The fair value of investments held for trading is determined based on the quoted market bid prices available on the relevant exchange or based on the relevant price quoted from the brokers.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values.

– 48 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

5. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into three operating divisions – trading, manufacturing and sale of household and other consumer products. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Trading	–	resale of household products
Manufacturing
– household products	–	manufacturing and sale of household products
Manufacturing – others	–	manufacturing and sale of other consumer products

Segment information about these businesses is presented below.

INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2006

REVENUE External sales RESULTS Segment results Unallocated income Unallocated expenses Gain on disposal of an associate Change in fair value of investments held for trading Discount on acquisition of additional interest in a subsidiary Finance costs Share of profits of associates Profit before taxation Taxation credit Profit for the year	Trading HK$ 190,662,788 9,821,966 –	Manufacturing – household products HK$ 112,175,957 14,901,580 –	Manufacturing – others HK$ 411,892,534 17,601,588 28,222,523	Consolidated HK$ 714,731,279 42,325,134 9,432,183 (58,337,417) 66,135 (117,148) 28,222,523 (5,792,712) 260,696 16,059,394 913,536 16,972,930

– 49 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

ASSETS AND LIABILITIES AS AT 31ST DECEMBER, 2006

Manufacturing – household Manufacturing Trading products – others HK$ HK$ HK$ ASSETS Segment assets 50,867,206 64,045,138 182,104,673 Interests in associates Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 12,806,473 13,971,712 67,703,542 Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 297,017,017 314,591 96,670,191
	394,001,799

	94,481,727 77,278,103
	171,759,830

OTHER INFORMATION FOR THE YEAR ENDED 31ST DECEMBER, 2006

Capital additions Depreciation of property, plant and equipment Release of prepaid lease payments (Loss) gain on disposal of property, plant and equipment Allowances for bad and doubtful debts	Manufacturing – household Manufacturing Trading products – others HK$ HK$ HK$ 2,515,280 1,340,544 5,474,398 1,791,951 1,894,105 14,194,303 160,763 162,366 299,179 (150,548) (80,236) (130,128) 2,213,157 – 90,708	Unallocated Consolidated HK$ HK$ 15,889 9,346,111 16,830 17,897,189 – 622,308 679,318 318,406 – 2,303,865

– 50 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2005

REVENUE External sales RESULTS Segment results Unallocated income Unallocated expenses Impairment losses on property, plant and equipment Loss on disposal of a subsidiary Change in fair value of investments held for trading Finance costs Share of losses of associates Loss before taxation Taxation charge Loss for the year	Trading HK$ 226,330,659 21,734,779 –	Manufacturing – household products HK$ 102,362,194 14,741,002 –	Manufacturing – others HK$ 418,790,171 8,112,732 (1,332,358)	Consolidated HK$ 747,483,024

				44,588,513 5,237,514 (59,229,166 (1,378,241 (1,332,358 10,323 (5,275,635 (190,674
				(17,569,724 (987,313
				(18,557,037

ASSETS AND LIABILITIES AS AT 31ST DECEMBER, 2005

Manufacturing – household Manufacturing Trading products – others HK$ HK$ HK$ ASSETS Segment assets 52,316,942 51,975,213 197,229,533 Interests in associates Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities 10,220,076 11,446,886 68,813,187 Unallocated corporate liabilities Consolidated total liabilities	Consolidated HK$ 301,521,688 1,907,394 121,453,014
	424,882,096

	90,480,149 89,831,888
	180,312,037

– 51 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

OTHER INFORMATION FOR THE YEAR ENDED 31ST DECEMBER, 2005

Capital additions Depreciation of property, plant and equipment Release of prepaid lease payments Loss on disposal of property, plant and equipment Allowances for bad and doubtful debts	Manufacturing – household Manufacturing Trading products – others HK$ HK$ HK$ 6,887,088 3,114,812 4,149,496 1,558,295 1,644,234 17,449,042 113,866 128,183 297,545 – – – – – 26,122	Unallocated Consolidated HK$ HK$ 80,480 14,231,876 160,662 20,812,233 – 539,594 62,074 62,074 – 26,122

Geographical segments

The following table provides an analysis of the Group’s revenue by geographical market, irrespective of the origin of the goods.

Geographical market North America Holland United Kingdom Germany Hong Kong Other European countries Australia France PRC Others	Sales reven geographical Year ended 31.12.2006 HK$ 233,107,426 181,377,092 115,548,808 59,375,977 36,937,309 35,680,632 20,819,752 12,074,452 11,466,964 8,342,867 714,731,279	ue by market Year ended 31.12.2005 HK$ 188,270,609 197,707,624 106,291,051 106,385,968 43,153,973 39,035,040 16,559,585 29,331,760 12,136,744 8,610,670
		747,483,024

– 52 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment, analysed by the geographical area in which the assets are located:

Hong Kong PRC Unallocated	Carrying amount of segment assets At At 31.12.2006 31.12.2005 HK$ HK$ 152,864,465 134,300,660 144,152,552 167,221,028 – – 297,017,017 301,521,688	Additions to property, plant and equipment Year ended Year ended 31.12.2006 31.12.2005 HK$ HK$ 2,569,409 1,102,376 6,760,813 13,049,020 15,889 80,480 9,346,111 14,231,876	Additions to property, plant and equipment Year ended Year ended 31.12.2006 31.12.2005 HK$ HK$ 2,569,409 1,102,376 6,760,813 13,049,020 15,889 80,480 9,346,111 14,231,876
			14,231,876

6. OTHER INCOME

Commission income Interest income on bank deposits Interest income on overdue trade debtors Amount recovered from insurance claim on damaged inventories Gain on disposal of property, plant and equipment Subcontracting fee income Sundry income	2006 HK$ 2,512,644 2,386,806 644,203 3,283,947 318,406 – 286,177 9,432,183	2005 HK$ 786,313 1,661,700 593,493 – – 720,808 1,475,200
		5,237,514

7. DISCOUNT ON ACQUISITION OF ADDITIONAL INTERESTS IN A SUBSIDIARY

During the year, an indirect wholly owned subsidiary of the Company entered into agreement with Mr. Lee Kun (“Mr. Lee”), a minority shareholder of Bigfield Goldenford Holdings Limited (“Bigfield”) to purchase his 37.5% shareholding in Bigfield at a consideration of HK$11,250,000. The consideration was determined after several negotiations and subsequently agreed by both parties. After the completion of the acquisition, Bigfield becomes the wholly owned subsidiary of the Company and a discount on acquisition of additional interest in Bigfield of approximately HK$28,222,000 has been recognised in the consolidated income statement.

8. FINANCE COSTS

Finance costs represent interest expense on bank borrowings.

9. TAXATION CREDIT (CHARGE)

Current tax Underprovision of Hong Kong Profits Tax in prior years Deferred tax_(Note 27)_	2006 HK$ (67,247) 980,783 913,536	2005 HK$ (1,250 (986,063
		(987,313

– 53 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

No provision for Hong Kong Profits Tax is made as the companies in Hong Kong have no assessable profits for the year.

No provision for profits tax is made in other jurisdictions as the subsidiaries in other jurisdiction have no assessable profits for the year.

The taxation credit (charge) for the year can be reconciled to the profit (loss) before taxation per the income statement as follows:

Profit (loss) before taxation Tax at the Hong Kong Profits Tax rate of 17.5% Tax effect of share of results of associates Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Underprovision in respect of prior years Utilisation of tax losses previously not recognised Tax effect of tax losses not recognised Taxation credit (charge) for the year 10. PROFIT (LOSS) FOR THE YEAR Profit (loss) for the year has been arrived at after charging: Allowance on bad and doubtful debts Auditor’s remuneration Cost of inventories recognised as an expense Depreciation of property, plant and equipment Release of prepaid lease payments Loss on disposal of property, plant and equipment Net foreign exchange loss Operating lease payments in respect of rented properties Staff costs: Directors’ remuneration Other staff salaries and allowances and benefits Other staff retirement benefit scheme contributions and after crediting: Gain on disposal of property, plant and equipment Write-back of allowance on inventories_(Note)_	Profit (loss) before taxation Tax at the Hong Kong Profits Tax rate of 17.5% Tax effect of share of results of associates Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Underprovision in respect of prior years Utilisation of tax losses previously not recognised Tax effect of tax losses not recognised Taxation credit (charge) for the year 10. PROFIT (LOSS) FOR THE YEAR Profit (loss) for the year has been arrived at after charging: Allowance on bad and doubtful debts Auditor’s remuneration Cost of inventories recognised as an expense Depreciation of property, plant and equipment Release of prepaid lease payments Loss on disposal of property, plant and equipment Net foreign exchange loss Operating lease payments in respect of rented properties Staff costs: Directors’ remuneration Other staff salaries and allowances and benefits Other staff retirement benefit scheme contributions and after crediting: Gain on disposal of property, plant and equipment Write-back of allowance on inventories_(Note)_	2006 HK$ 16,059,394 (2,810,394) 45,622 (5,355,038) 8,833,111 (67,247) 267,482 – 913,536 2006 HK$ 2,303,865 1,213,763 645,465,503 17,897,189 622,308 – 2,458,423 16,528,654	2006 HK$ 16,059,394 (2,810,394) 45,622 (5,355,038) 8,833,111 (67,247) 267,482 – 913,536 2006 HK$ 2,303,865 1,213,763 645,465,503 17,897,189 622,308 – 2,458,423 16,528,654	2006 HK$ 16,059,394 (2,810,394) 45,622 (5,355,038) 8,833,111 (67,247) 267,482 – 913,536 2006 HK$ 2,303,865 1,213,763 645,465,503 17,897,189 622,308 – 2,458,423 16,528,654	2005 HK$ (17,569,724) 3,074,702 (33,368) (4,829,468) 2,504,772 (1,250) – (1,702,701) (987,313) 2005 HK$ 26,122 1,200,901 675,117,988 20,812,233 539,594 62,074 1,216,377 16,735,069
		6,835,000 91,734,843 3,301,679			6,493,825 89,279,434 3,711,888
		101,871,522 318,406 –			99,485,147 – 556,232

Note: Write back of allowance on inventories was made when the net realisable value of those inventories on which allowance had previously been made is greater than cost.

– 54 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

11. DIRECTORS’ EMOLUMENTS

Name of directors Lam Po Kwai, Frankie Wong Yau Ching, Maria Lee Yuen Bing, Nina So Man Yee, Katherine Au Son Yiu Johnson Lee He Ling Tang Tin Sek Total emoluments 2006 Name of directors Lam Po Kwai, Frankie Wong Yau Ching, Maria Lee Yuen Bing, Nina So Man Yee, Katherine Au Son Yiu Johnson Lee He Ling Tang Tin Sek Total emoluments 2005	Directors’ fees HK$ – – – – 198,000 198,000 45,000 222,000 663,000 Directors’ fees HK$ – – – – 180,000 180,000 90,000 180,000 630,000	Salaries and other benefits HK$ 2,400,000 1,840,000 650,000 748,000 – – – – 5,638,000 Salaries and other benefits HK$ 1,920,000 1,760,000 627,000 718,000 – – – – 5,025,000	Performance related incentive benefits HK$ (Note) – 258,800 64,700 64,700 – – – – 388,200 Performance related incentive benefits HK$ – 460,000 115,000 115,000 – – – – 690,000	Pension scheme contribution HK$ 48,000 48,000 25,000 24,800 – – – – 145,800 Pension scheme contribution HK$ 48,000 48,000 26,550 26,275 – – – – 148,825	Total 2006 HK$ 2,448,000 2,146,800 739,700 837,500 198,000 198,000 45,000 222,000
					6,835,000

					Total 2005 HK$ 1,968,000 2,268,000 768,550 859,275 180,000 180,000 90,000 180,000
					6,493,825

Note: The performance related incentive payment is determined as a percentage of each profitable segments of the Group for the two years ended 31st December, 2006.

During both years, no remuneration was paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office. None of the Directors has waived any remuneration during the year.

– 55 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

12. EMPLOYEES’ EMOLUMENTS

The five highest paid individuals of the Group included two (2005: three) directors, details of whose emoluments are set out above. The emoluments of the remaining three (2005: two) highest paid employees, other than directors of the Company, were as follows:

Salaries and other benefits Retirement scheme benefit contributions	2006 HK$ 3,368,848 45,200 3,414,048	2005 HK$ 2,043,560 55,800
		2,099,360

Emoluments of these remaining three (2005: two) highest paid employees were within the following bands:

Nil – HK$1,000,000 HK$1,000,001 – HK$1,500,000	Number of employees 2006 2005 1 – 2 2

13. DIVIDENDS

No dividend was proposed during 2006.

14. BASIC EARNINGS (LOSS) PER SHARE

The calculation of the basic earnings (loss) per share is based on the profit attributable to the equity holders of the Company of HK$18,911,884 (2005: loss of HK$13,030,909) and 477,926,292 (2005: 477,926,292) shares in issue during the year.

– 56 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

15. PROPERTY, PLANT AND EQUIPMENT

COST At 1st January, 2005 Exchange realignment Additions Disposals Written off on disposal of a subsidiary At 31st December, 2005 Exchange realignment Additions Disposals At 31st December, 2006 DEPRECIATION AND IMPAIRMENT At 1st January, 2005 Exchange realignment Provided for the year Impairment losses recognised in the income statement Eliminated on disposals Written off on disposal of a subsidiary At 31st December, 2005 Exchange realignment Provided for the year Eliminated on disposals At 31st December, 2006 CARRYING VALUES At 31st December, 2006 At 31st December, 2005	Land and buildings HK$ 72,467,924 571,421 7,731,834 (1,858,140) (2,803,738) 76,109,301 325,930 207,950 (7,732,260) 68,910,921 20,614,817 131,993 2,192,749 1,215,017 (285,661) (913,354) 22,955,561 114,271 2,136,917 (2,510,828) 22,695,921 46,215,000 53,153,740	Computer equipment HK$ 14,836,369 – 434,559 – – 15,270,928 – 272,519 (3,180,268) 12,363,179 11,544,059 – 703,034 23,411 – – 12,270,504 – 633,300 (3,178,518) 9,725,286 2,637,893 3,000,424	Furniture and fixtures HK$ 109,925,777 35,663 2,117,657 (104,814) (75,939) 111,898,344 50,393 2,678,470 (3,915,180) 110,712,027 84,462,303 30,997 5,195,319 125,034 (76,347) (56,657) 89,680,649 45,614 4,703,756 (3,909,985) 90,520,034 20,191,993 22,217,695	Motor vehicles HK$ 10,286,826 19,775 425,922 (2,253,387) – 8,479,136 28,212 4,687,576 (2,989,624) 10,205,300 6,647,270 9,130 776,463 – (142,228) – 7,290,635 16,062 715,598 (2,380,729) 5,641,566 4,563,734 1,188,501	Plant and machinery HK$ 278,959,323 526,877 3,521,904 (155,350) (6,890,956) 275,961,798 752,166 1,499,596 (11,962,709) 266,250,851 220,914,547 488,749 11,944,668 14,779 (2,046,341) (4,858,962) 226,457,440 708,533 9,707,618 (11,958,775) 224,914,816 41,336,035 49,504,358	Total HK$ 486,476,219 1,153,736 14,231,876 (4,371,691) (9,770,633) 487,719,507 1,156,701 9,346,111 (29,780,041) 468,442,278 344,182,996 660,869 20,812,233 1,378,241 (2,550,577) (5,828,973) 358,654,789 884,480 17,897,189 (23,938,835) 353,497,623 114,944,655 129,064,718

– 57 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The above items of property, plant and equipment are depreciated at the following rates per annum:

Buildings located in Hong Kong Over the term of the lease Buildings held overseas Reducing balance method at 4% Others Reducing balance method at 20%

The carrying value of properties shown above comprises:

Freehold properties in Canada Properties: – Held in Hong Kong, long leases – Held outside Hong Kong, long leases – Held outside Hong Kong, medium-term leases	2006 HK$ – 10,884,508 428,077 34,902,415 46,215,000	2005 HK$ 5,221,432 11,411,439 438,518 36,082,351
		53,153,740

For the year ended 31st December, 2005, the directors conducted a review of the property, plant and equipment held by two subsidiaries and determined that those assets were impaired. Accordingly, impairment losses of HK$1,215,017 and HK$163,224 have been recognised on land and buildings and other plant and equipment respectively. The directors reviewed the operation of a subsidiary which incurred continuous losses and decided to recognise impairment loss on the land and building held by this subsidiary with reference to the prevailing market price. The directors also decided to recognise impairment losses on all the plant and equipment held by an inactive subsidiary because in the opinion of the directors, these assets cannot be used by the Group any more, and their saleable value is negligible.

16. PREPAID LEASE PAYMENTS

The Group’s prepaid lease payments comprise: Leasehold land: Held in Hong Kong, long leases Held outside Hong Kong, long leases Held outside Hong Kong, medium-term leases Analysed for reporting purposes as: Current asset Non-current asset	2006 HK$ 11,485,422 494,218 10,666,395 22,646,035 626,880 22,019,155 22,646,035	2005 HK$ 11,765,553 506,573 10,822,241
		23,094,367

		620,674 22,473,693
		23,094,367

– 58 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

17. INTERESTS IN ASSOCIATES

Cost of investment in unlisted associates Share of post-acquisition profits	2006 HK$ 51,098 263,493 314,591	2005 HK$ 51,233 1,856,161
		1,907,394

As at 31st December, 2006, the Group had interest in the following associate:

					Proportion of
	Form of		Principal		nominal value	Proportion
	business	Place of	place of	Class of	of issued capital	of voting
Name of entity	structure	incorporation	operation	share held	held by the Group	power held	Principal activity
					%	%
Webradio Ltd.	Incorporated	Hong Kong	Hong Kong	Ordinary	33%	33%	Operation of a website
Amount due	to an associate is unsecured, non-interest				bearing and	repayable on demand.

18. AVAILABLE-FOR-SALE INVESTMENT

Club debenture, at fair value 19. INVENTORIES At cost less provision: Raw materials Work in progress Finished goods 20. OTHER ASSETS Trade debtors and bills receivable _Less:_Allowances for bad and doubtful debts Other debtors and prepayments	2006 HK$ 880,000 2006 HK$ 50,315,582 5,592,163 11,655,391 67,563,136 2006 HK$ 87,173,510 (2,598,560) 84,574,950 8,235,319 92,810,269	2005 HK$ 880,000

		2005 HK$ 49,777,246 7,382,282 9,817,016
		66,976,544

		2005 HK$ 86,313,807 (942,132
		85,371,675 4,628,546
		90,000,221

The Group allows an average credit period of 90 days to its trade customers.

– 59 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The following is an aged analysis of trade debtors and bills receivable net of impairment losses at the reporting date:

0 – 60 days 61 – 90 days > 90 days	2006 HK$ 71,184,437 6,360,126 7,030,387 84,574,950	2005 HK$ 67,840,745 7,924,763 9,606,167
		85,371,675

Trade debtors and bills receivable of approximately HK$70,700,000 (2005: HK$67,703,000) were denominated in United State dollars, the currency other than the functional currency of the respective group entities.

Bills receivable amounting to HK$22,654,110 (2005: HK$27,533,714) discounted with recourse are pledged to secure other bank loans as disclosed in note 24.

Bank balances and cash, short term bank deposits and short term pledged bank deposits comprise cash held by the Group and the short-term deposits are with an original maturity of three months or less. These balances receive interest at an average rate of 4.125% (2005: 3.5%). Bank balances and cash and short-term bank deposits of approximately HK$48,877,000 (2005: HK$51,007,000) were denominated in United States dollars, the currency other than the functional currency of the respective group entities.

The long term bank deposits at 31st December, 2005 was denominated in United States dollars, the currency other than the functional currencies of the respective group entities, and carried fixed interest rate of 3.65% and its original maturity date would be 31st August, 2009. The deposits were early released during the year.

21. INVESTMENTS HELD FOR TRADING

Equity securities listed in Hong Kong Mutual funds	2006 HK$ 1,279,437 7,350,928 8,630,365	2005 HK$ 1,580,481 1,558,254
		3,138,735

22. SHORT TERM PLEDGED BANK DEPOSITS

The Group’s bank deposits of approximately HK$2.8 million (2005: HK$2.7 million) have been pledged to secure banking facilities granted to a subsidiary. The pledged bank deposits carry fixed interest rate of 3.5% per annum.

– 60 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

23. OTHER LIABILITIES

Trade creditors Bills payable Other creditors and accrued charges	2006 HK$ 58,723,200 16,372,750 21,655,134 96,751,084	2005 HK$ 56,854,881 13,937,169 21,243,411
		92,035,461

The following is an aged analysis of trade creditors and bills payable as at the reporting date:

0 – 60 days 61 – 90 days > 90 days	2006 HK$ 59,472,604 11,067,447 4,555,899 75,095,950	2005 HK$ 55,882,806 10,082,953 4,826,291
		70,792,050

Trade creditors and bills payable of approximately HK$28,648,000 (2005: HK$22,335,000) were denominated in United State dollars, the currency other than the functional currency of the respective group entities.

24. BANK BORROWINGS

Bank borrowings comprise the following: Trust receipt and import loans Other bank loans_(Note)_ Secured Unsecured	2006 HK$ 47,374,746 22,654,110 70,028,856 3,597,966 66,430,890 70,028,856	2005 HK$ 54,782,189 27,533,714
		82,315,903

		9,878,603 72,437,300
		82,315,903

Note: Other bank loans represent the loans from discounted bills receivable with recourse.

Bank borrowings of approximately HK$63,966,000 (2005: HK$73,861,000) were denominated in United States dollars, the currency other than the functional currency of the respective group companies.

The above borrowings bear interests at floating rates, and thus expose to cash flow interest rate risk. The average effective interest rate is approximately 7.05% (2005: 5.29%) per annum.

– 61 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

25. SHARE CAPITAL

Number of ordinary shares of HK$0.10 each 2006 & 2005 Authorised 1,000,000,000 Issued and fully paid: At beginning of the year and at end of the year 477,926,292	Nominal value 2006 & 2005 HK$ 100,000,000

	47,792,629

26. SHARE OPTIONS SCHEME

The Company’s share option scheme (the Scheme), was adopted pursuant to a resolution passed on 31st May, 2002 for the primary purpose of providing incentives to director and eligible employees, and is effective for a period of 10 years commencing on the adoption date. Under the Scheme, the Board of Directors of the Company may grant options to eligible employees, including directors of the Company and its subsidiaries, to subscribe for shares in the Company.

Options granted must be taken up within 28 days of the date of grant, upon payment of HK$1 per option. Options may be exercised at any time from the date of grant of the share option to the expiration of the Scheme. The exercise price is determined by the directors of the Company, and will not be less than the higher of (i) the closing price of the Company’s shares on the date of grant, (ii) the average closing price of the shares for the five business days immediately preceding the date of grant; and (iii) the nominal value of the Company’s share.

There is no outstanding share option and no share options were granted or exercised during the year.

27. DEFERRED TAXATION

The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior reporting periods:

Accelerated tax depreciation HK$ At 1st January, 2005 5,959,930 Charge to income statement for the year 1,469 At 31st December, 2005 5,961,399 (Credit) charge to income statement for the year (1,107,913) At 31st December, 2006 4,853,486	Tax losses HK$ (1,279,320) 984,594 (294,726) 127,130 (167,596)	Total HK$ 4,680,610 986,063
		5,666,673 (980,783
		4,685,890

At the balance sheet date, the Group has estimated unused tax losses of HK$183,044,224 (2005: HK$185,299,150) available for offset against future profits. A deferred tax asset has been recognised in respect of HK$957,693 (2005: HK$1,684,148) of such losses. No deferred tax asset has been recognised in respect of the remaining HK$182,086,531 (2005: HK$183,615,002) due to the uncertainty of future profit streams. The losses may be carried forward indefinitely.

– 62 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

28. DISPOSAL OF A SUBSIDIARY

On 22nd December, 2005, the Group disposed of its 60% equity interest in Tianjin Jiatian Tinplate Painting Company Limited (“Tianjin Jiatian”) at a consideration of HK$1,923,078 to the other shareholder of Tianjin Jiatian. The net assets of Tianjin Jiatian at the date of disposal were as follows:

NET ASSETS DISPOSED OF Property, plant and equipment Inventories Trade and other receivables Bank balances and cash Creditors and accrued charges Minority interests Loss on disposal Total consideration Satisfied by: Cash payment (included in debtors, bills receivable and prepayments) Cash outflow arising on disposal: Bank balances and cash disposed of	HK$ 3,941,660 1,074,215 1,425,315 847,923 (1,863,387
	5,425,726 (2,170,290
	3,255,436 (1,332,358
	1,923,078

	1,923,078

	847,923

The subsidiary disposed of contributed loss of HK$226,172 for the year ended 31st December, 2005 to the Group’s loss before taxation.

The deferred consideration was settled during the year ended 31st December, 2006.

29. CAPITAL COMMITMENTS

Capital expenditure in respect of acquisition of property, plant and equipment contracted for but not provided in the consolidated financial statements Group’s share of the capital commitments of its joint venture contracted for but not provided in the consolidated financial statements	2006 HK$ 314,563 850,000	2005 HK$ 241,698

		–

– 63 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

30. OPERATING LEASE COMMITMENTS

At the balance sheet date, the Group had commitments for future minimum payments under non-cancellable operating leases in respect of rented properties which fall due as follows:

Within one year In the second to fifth year inclusive	2006 HK$ 16,690,557 17,111,874 33,802,431	2005 HK$ 16,503,582 32,009,559
		48,513,141

Leases are negotiated for a term of one to five years and rentals are fixed for the leased period.

31. RELATED PARTY TRANSACTIONS

(a) During the year, the Group entered into the following transactions with related parties:

		2006	2005
		HK$	HK$
Rental expense	to a related company_(Note)_	960,000	960,000

Note: The related company is a company in which certain directors of the Company have beneficial interests. Rental expense was for the provision of quarters to certain directors of the Company and has been included in directors’ remuneration.

(b) The Group acquired additional interests of 37.5% in a subsidiary from Mr. Lee at a consideration of HK$11,250,000.

(c) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

Salaries and other short term employee benefits Retirement benefit costs	2006 HK$ 10,058,048 191,000 10,249,048	2005 HK$ 8,388,560 204,625
		8,593,185

The remuneration of directors and key executives is determined having regard to the performance of individuals and market treads.

– 64 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

32. RETIREMENT BENEFITS SCHEME

Defined contribution scheme

Since 1st December, 2000, the Group has operated pension schemes under the rules and regulations of the Mandatory Provident Fund Schemes Ordinance (“MPF Schemes”) for all qualifying employees in Hong Kong. The assets of the MPF Scheme are held separately in an independently managed fund. The Group has followed the minimum statutory contribution requirements of 5% of eligible employees’ relevant income. The contributions are charged to the income statement as incurred.

The relevant PRC subsidiaries are required to make contributions to the state requirement schemes in the PRC based on 3% to 4% of the monthly salaries of their current employees to fund the benefits. The employees are entitled to retirement pension calculated with reference to their basic salaries on retirement and their length of service in accordance with the relevant government regulations. The PRC government is responsible for the pension liability to these retired staff.

The total cost charged to income statement of HK$3,447,479 (2005: HK$3,860,713) represents contributions payable to the schemes by the Group at rates specified in the rules of the schemes.

Defined benefit scheme

A subsidiary of the Company operates a funded defined benefit pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the Group in funds under the control of the trustee. The scheme was frozen at 30th November, 2000 and all qualifying employees were transferred to the MPF Scheme. The obligations of the scheme were also fixed at that date.

At 31st December, 2006, the market value of the scheme assets is greater than the scheme obligation of HK$1,923,177 (2005: HK$1,972,332). The excess of the scheme assets over the scheme obligation has not been recognised in the consolidated financial statements as the directors of the Company consider the effect as negligible.

33. SUBSIDIARIES

Details of the Company’s subsidiaries at 31st December, 2006 are as follows:

			Proportion of
	Place of		nominal value of
	incorporation or		issued/registered
	registration/	Nominal value of	capital held
Name of company	operation	issued/registered capital	by the Company	Principal activities
Big Field (B.V.I.) Limited	British Virgin	Ordinary – US$600	100%	Investment holding
	Islands
Bigfield Goldenford Holdings	Hong Kong	Ordinary – HK$153,000	100%	Manufacture of wooden
Limited (“Bigfield”)		Deferred – HK$147,000	49%	and paper products
		Note (i)
Blandas Concord Inc.	Liberia	Ordinary – CAD$1,400,000	100%	Investment holding
Diamond Link Enterprises	Canada	Ordinary – CAD$2	100%	Property investment
(Canada) Ltd.
Dominion Trading Ltd.	British Virgin	Ordinary – US$100	100%	Investment holding,
(“Dominion Trading”)	Islands			property and share
				investment

– 65 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

			Proportion of
	Place of		nominal value of
	incorporation or		issued/registered
	registration/	Nominal value of	capital held
Name of company	operation	issued/registered capital	by the Company	Principal activities
Frankie Dominion (B.V.I.)	British Virgin	Ordinary – US$35,000	100%	Investment holding
Company Limited	Islands
Frankie Dominion (Holdings)	Hong Kong	Ordinary – HK$1,000	100%	Investment holding,
Limited		Deferred – HK$35,000,000	–	property investment and
		Note (i)		design, manufacture
				and sale of a diversified
				range of consumer home
				products
Frankie Trading Company	Hong Kong	Ordinary – HK$5,000,000	100%	Inactive
Limited
Home Connection	United States	Nil	100%	Sale agent
Incorporated
Home Mart Store Limited	Hong Kong	Ordinary – HK$5,000,000	100%	Inactive
Islandcan Limited	Hong Kong	Ordinary – HK$4,400,000	100%	Investment holding
		Deferred – HK$3,600,000	–
		Note (i)
Michel Manufactory Limited	Hong Kong	Ordinary – HK$10,000	100%	Provision of marketing
				services
Newall International Inc.	British Virgin	Ordinary – US$100	100%	Manufacture of consumer
	Islands			home products in the
				PRC
東莞五洲制罐廠有限公司	PRC	HK$33,835,800	Note (ii)	Tin-plate printing
(Equity joint venture
company)
東莞嘉利美商家庭用品	PRC	HK$26,850,000	100%	Inactive
有限公司
(Equity joint venture
company)
嘉利興（廣州）貿易有限公司	PRC	HK$3,000,000	100%	Trading of consumer
				home products

– 66 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Notes:

(i) The deferred shares, which are not held by the Group except for Bigfield Goldenford Holdings Limited, carry minimal rights to dividends or to receive notice of or attend or vote at any general meeting of these companies. On a winding-up, the holders of the deferred shares are entitled to share out of the surplus assets of these companies only after a total of HK$100,000,000,000,000,000 has been distributed to the holders of the ordinary shares.
(ii) Under a joint venture agreement, the Group, through Islandcan Limited, is required to contribute 75% of the initial registered capital of this company, and 100% contribution on any subsequent increment in registered capital. As at the balance sheet date, HK$850,000 registered capital has not been paid up. However, Islandcan Limited will be entitled to the residue of the joint venture company’s profit after deducting a fixed annual amount to the PRC joint venture partner. On liquidation of the joint venture company, the Group will be entitled to the surplus assets after a return of capital contributed by the PRC joint venture partner.

Except for Frankie Dominion (B.V.I.) Company Limited which is held directly by the Company, all subsidiaries are indirectly held. All subsidiaries operate principally in their places of incorporation.

None of the subsidiaries had any debt securities subsisting at the end of the year or at any time during the year.

34. POST BALANCE SHEET EVENT

Subsequent to year end, Bigfield entered into provisional agreements with independent third parties for the disposal of certain of its land and buildings, with an aggregate carrying amount of HK$7,841,800, for a total consideration of HK$12,000,000.

– 67 –

APPENDIX I FINANCIAL INFORMATION ON THE GROUP

3. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2007 WITH COMPARATIVE FIGURES FOR THE CORRESPONDING PERIOD OF 2006.

The following is extracted the text of the unaudited consolidated results of the Group together with the accompany notes contained on pages 3 to 18 of the interim report of the Company for the six months ended 30 June 2007.

CONDENSED CONSOLIDATED INCOME STATEMENT

			For the six	months
			ended 30th June,
			2007		2006
			(Unaudited)	(Unaudited)
	Notes		HK$’000	HK$’000
Revenue	3		291,366	324,920
Cost of sales			(280,042)	(290,310)
Gross profit			11,324	34,610
Other income			6,617		2,292
Distribution costs			(8,453)	(10,919)
Administrative expenses			(28,898)	(30,323)
Change in fair value on investments
held for trading
– realized gain			2,019		–
– unrealized gain (loss)			433		(820)
Finance costs	4		(2,274)	(2,960)
Share of gain of associates			–		341
Gain on disposal of an associate			–		66
Discount on acquisition of additional
interests in a subsidiary			–	12,340
(Loss) profit before taxation	5		(19,232)		4,627
Taxation	6		(7)		–
(Loss) profit for the period			(19,239)		4,627

Attributable to:
Equity holders of the Company			(19,239)		6,266
Minority interests			–	(1,639)
			(19,239)		4,627

Basic (loss) earnings per share	7	(HK4.03 cents)		HK1.31	cents

– 68 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED BALANCE SHEET

Non-current assets Property, plant and equipment Prepaid lease payments Interests in associates Available-for-sale investment Current assets Inventories Debtors, bills receivable and prepayments Prepaid lease payments Investments held for trading Tax recoverable Short term bank deposits Short term pledged bank deposits Bank balances and cash Current liabilities Creditors, bills payable and accrued charges Amount due to an associate Bank borrowings – due within one year Net current assets Capital and reserves Share capital Reserves Equity attributable to equity holders of the Company Non-current liability Deferred taxation	At At 30th June, 31st December, 2007 2006 (Unaudited) (Audited) HK$’000 HK$’000 109,505 114,945 17,455 22,019 – 314 880 880 127,840 138,158 75,084 67,563 90,719 92,810 380 627 728 8,630 1,955 1,949 16,254 39,505 2,863 2,840 41,587 41,919 229,570 255,843 93,137 96,751 – 294 55,780 70,028 148,917 167,073 80,653 88,770 208,493 226,928 47,793 47,793 156,014 174,449 203,807 222,242 4,686 4,686 208,493 226,928	At At 30th June, 31st December, 2007 2006 (Unaudited) (Audited) HK$’000 HK$’000 109,505 114,945 17,455 22,019 – 314 880 880 127,840 138,158 75,084 67,563 90,719 92,810 380 627 728 8,630 1,955 1,949 16,254 39,505 2,863 2,840 41,587 41,919 229,570 255,843 93,137 96,751 – 294 55,780 70,028 148,917 167,073 80,653 88,770 208,493 226,928 47,793 47,793 156,014 174,449 203,807 222,242 4,686 4,686 208,493 226,928
		138,158
		67,563 92,810 627 8,630 1,949 39,505 2,840 41,919
		255,843
		96,751 294 70,028
		167,073
		88,770
		226,928

		47,793 174,449
		222,242 4,686
		226,928

– 69 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30th June, 2007

At 1st January, 2006 Release of translation reserve upon disposal of an associate Profit (loss) for the year Total recognised income for the year Acquisition of additional interests in a subsidiary At 30th June, 2006 (unaudited) At 1st January, 2007 Exchange differences arising on translation of foreign operation Loss for the year Total recognised expense for the period At 30th June, 2007 (unaudited)		Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Total HK$’000 203,159 (255) 6,266 209,170 – 209,170 222,242 804 (19,239) (18,435) 203,807	Minority interests HK$’000 41,412 – (1,639) 39,773 (17,354) 22,419 – – – – –	Total HK$’000 244,571 (255) 4,627 248,943 (17,354) 231,589 222,242 804 (19,239) (18,435) 203,807
	Share capital HK$’000 47,793 – – 47,793 – 47,793 47,793 – – – 47,793	Share premium HK$’000 144,997 – – 144,997 – 144,997 144,997 – – – 144,997	Capital Special Translation redemption Reserve reserve reserve HK$’000 HK$’000 HK$’000 18,236 3,430 85 – (255) – – – – 18,236 3,175 85 – – – 18,236 3,175 85 18,236 3,601 85 – 804 – – – – – 804 – 18,236 4,405 85	Retained Profits (deficit) HK$’000 (11,382) – 6,266 (5,116) – (5,116) 7,530 – (19,239) (19,239) (11,709)

– 70 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Net cash used in operating activities Net cash from (used in) investing activities Purchase of property, plant and equipment Proceed from disposals of property, plant and equipment Other investing activities Net cash (used in) from financing activities New bank borrowings raised Repayments of bank borrowings Interest paid Net decrease in cash and cash equivalents Cash and cash equivalents at 1st January Cash and cash equivalents at 30th June Analysis of the balances of cash and cash equivalents Being: Short term bank deposits Bank balances and cash	For the six months ended 30th June, 2007 2006 (unaudited) (unaudited) HK$’000 HK$’000 (14,173) (3,558)	For the six months ended 30th June, 2007 2006 (unaudited) (unaudited) HK$’000 HK$’000 (14,173) (3,558)	For the six months ended 30th June, 2007 2006 (unaudited) (unaudited) HK$’000 HK$’000 (14,173) (3,558)
	(5,855) 12,002 965		(2,700) 187 (1,195)
	7,112		(3,708)
	146,298 (160,546) (2,273)		237,775 (242,433) (2,960)
	(16,521) (23,582) 81,423 57,841 16,254 41,587 57,841		(7,618) (14,884) 89,462 74,578 40,137 34,441 74,578

– 71 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONDENSED CONSOLDIATED FINANCIAL STATEMENTS

1. Basis of preparation

The unaudited condensed interim financial statements are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” and other relevant HKASs and Interpretations, Hong Kong Financial Report Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and with the applicable disclosure requirements of Appendix 16 to the Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

2. Principal accounting policies

The condensed financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values, as appropriate.

The accounting policies used in the condensed financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31st December, 2006.

In the current interim period, the Group has applied, for the first time, the following new standard, amendment and interpretations (“new HKFRSs”) issued by the HKICPA, which are effective for the Group’s financial year beginning on 1st January, 2007.

HKAS 1 (Amendment)	Capital Disclosures1
HKFRS 7	Financial Instruments: Disclosures1
HK(IFRIC)-INT 7	Applying the Restatement Approach under HKAS 29
	Financial Reporting in Hyperinflationary Economies2
HK(IFRIC)-INT 8	Scope of HKFRS 23
HK(IFRIC)-INT 9	Reassessment of Embedded Derivatives4
HK(IFRIC)-INT 10	Interim Financial Reporting and Impairment5

1 Effective for annual periods beginning on or after 1st January, 2007
2 Effective for annual periods beginning on or after 1st March, 2006
3 Effective for annual periods beginning on or after 1st May, 2006
4 Effective for annual periods beginning on or after 1st June, 2006
5
Effective for annual periods beginning on or after 1st November, 2006

The adoption of these new HKFRSs had no material effect on the results or financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognized.

The Group has not early applied the following new standards or interpretations that have been issued but are not yet effective.

HKAS 23 (Revised) Borrowing costs[1] HKFRS 8 Operating segments[1] HK(IFRIC)-Int 11 HKFRS 2: Group and treasury share transactions[2] HK(IFRIC)-Int 12 Service concession arrangement[3]

1 Effective for annual periods beginning on or after 1st January, 2009
2 Effective for annual periods beginning on or after 1st March, 2007
3
Effective for annual periods beginning on or after 1st January, 2008

The directors of the Company anticipate that the application of these standards or interpretations will have no material impact on the results and the financial position of the Group.

– 72 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

3. Revenue

Revenue represents the net amounts received and receivables for goods sold by the Group to outside customers, less returns and allowance for the six months ended 30th June, 2007.

Business segments

The Group is mainly engaged in trading, manufacturing and sale of household and other consumer products and operates under three divisions. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Trading	–	resale of household products
Manufacturing	–	manufacturing and sale of household products
– household products
Manufacturing – others	–	manufacturing and sale of other consumer products

Segment information about these businesses is presented below.

Unaudited income statement for the six months ended 30th June, 2007

Revenue External sales Results Segment results Unallocated income and expenses Change in fair value on investments held for trading Finance costs Loss before taxation Taxation Loss for the period	Trading HK$’000 75,780 4,815	Manufacturing – household products HK$’000 47,096 5,862	Manufacturing – others HK$’000 168,490 (7,806)	Consolidated HK$’000 291,366 2,871 (22,281) 2,452 (2,274) (19,232) (7) (19,239)

– 73 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Unaudited income statement for the six months ended 30th June, 2006

Revenue External sales Results Segment results Unallocated income and expenses Change in fair value on investments held for trading Finance costs Share of gain of associates Gain on disposal of an associate Discount on acquisition of additional interests in a subsidiary Profit before taxation Taxation Profit for the period Geographical segments	Trading HK$’000 96,182 4,270 –	Manufacturing – household products HK$’000 50,778 8,808 –	Manufacturing – others HK$’000 177,960 10,613 12,340	Consolidated HK$’000 324,920

				23,691 (28,031 (820 (2,960 341 66 12,340
				4,627 –
				4,627

The Group’s operations are mainly located in Hong Kong and the People’s Republic of China (other than Hong Kong) (the “PRC”).

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods.

Geographical market North America Holland Germany United Kingdom France Other European countries Hong Kong Australia China Others	Sales revenue by geographical market for the six months ended 30th June, 2007 2006 (unaudited) (unaudited) HK$’000 HK$’000 96,571 95,534 80,050 84,880 20,449 35,701 38,701 49,583 3,346 8,496 23,042 15,423 11,146 19,573 7,938 7,366 5,297 5,677 4,826 2,687 291,366 324,920	Sales revenue by geographical market for the six months ended 30th June, 2007 2006 (unaudited) (unaudited) HK$’000 HK$’000 96,571 95,534 80,050 84,880 20,449 35,701 38,701 49,583 3,346 8,496 23,042 15,423 11,146 19,573 7,938 7,366 5,297 5,677 4,826 2,687 291,366 324,920
		324,920

– 74 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

4. Finance costs

Finance costs represent interest expense on bank borrowings.

5. (Loss) profit before taxation

(Loss) profit before taxation has been arrived at after charging:

Gain (loss) on disposal of property, plant and equipment and prepaid lease payments Depreciation and amortisation Operating lease payments in respect of rented properties Taxation Hong Kong profits tax Overseas taxation	For the six months ended 30th June, 2007 2006 (Unaudited) (Unaudited) HK$’000 HK$’000 3,995 (401) 8,080 8,830 6,775 7,745 For the six months ended 30th June, 2007 2006 (Unaudited) (Unaudited) HK$’000 HK$’000 – – 7 – 7 –

6. Taxation

No provision for Hong Kong profits tax has been made as the Company had no assessable profits arising in Hong Kong for the current and prior period.

7. (Loss) earnings per share

The calculation of basic (loss) earnings per share is based on the loss attributable to equity holders of the Company of approximately HK$19,239,000 for the period (2006: profit of approximately HK$6,266,000) and approximately 477,926,000 (2006: approximately 477,926,000) shares in issue during the period.

No diluted earnings per share is shown as there is no dilutive effect on the earnings per share for the six months ended 30th June, 2006 and 30th June, 2007.

8. Property, plant and equipment

During the period, the Group spent approximately HK$5,855,000 (2006: approximately HK$2,700,000) on additions to property, plant and equipment to upgrade its manufacturing capabilities.

– 75 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

9. Debtors, bills receivable and prepayments

Trade debtors and bills receivable _Less:_Allowances for bad and doubtful debts Other debtors and prepayments	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 68,416 87,173 (2,444) (2,598 24,747 8,235 90,719 92,810	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 68,416 87,173 (2,444) (2,598 24,747 8,235 90,719 92,810
		92,810

The Group allows an average credit period of 90 days to its trade customers.

The following is an aged analysis of trade debtors and bills receivable as at the reporting date:

10.

0 – 60 days 61 – 90 days > 90 days Creditors, bills payable and accrued charges Trade creditors Bills payable Other creditors and accrued charges	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 51,926 71,185 4,676 6,360 9,370 7,030 65,972 84,575 30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 59,328 58,723 14,171 16,373 19,638 21,655 93,137 96,751	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 51,926 71,185 4,676 6,360 9,370 7,030 65,972 84,575 30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 59,328 58,723 14,171 16,373 19,638 21,655 93,137 96,751
		96,751

The following is an aged analysis of trade creditors and bills payable as at the reporting date:

0 – 60 days 61 – 90 days > 90 days	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 55,617 59,473 13,899 11,067 3,983 4,556 73,499 75,096	30th June, 31st December, 2007 2006 (unaudited) (audited) HK$’000 HK$’000 55,617 59,473 13,899 11,067 3,983 4,556 73,499 75,096
		75,096

– 76 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

11. Share capital

There were no movements in the share capital of the Company during the period from 1st January, 2007 to 30th June, 2007.

		Number of ordinary shares of	Number of ordinary shares of
		HK$0.10 each		Nominal value
		30th June,	31st December,	30th June,	31st December,
		2007	2006	2007	2006
		(unaudited)	(audited)	(unaudited)	(audited)
				HK$	HK$
	Authorised:
	Ordinary shares of
	HK$0.1 each	1,000,000,000	1,000,000,000	100,000,000	100,000,000

	Issued and fully paid:
	Ordinary share of
	HK$0.1 each	477,926,292	477,926,292	47,792,629	47,792,629

12.	Capital commitments
				30th June,	31st December,
				2007	2006
				(unaudited)	(audited)
				HK$’000	HK$’000
	Capital expenditure in respect of acquisition of
	property, plant and equipment contracted for		but
	not provided in the financial statements			1,146	314

– 77 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

4. INDEBTEDNESS STATEMENT

Borrowings

As at the close of business on 31 January 2008, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Enlarged Group had the following outstanding borrowings:

	HK$’000
Bank borrowings	99,105

Contingencies

The Enlarged Group did not have any material contingent liabilities or guarantees as at 31 January 2008.

Disclaimer

Save as aforesaid and apart from intra-group liabilities, as at the close of business on 31 January 2008, the Enlarged Group had no debt securities issued and outstanding, and authorised or otherwise created but unissued, term loans, distinguishing between guaranteed, unguaranteed, secured and unsecured, and guaranteed, unguaranteed, secured and unsecured bank borrowings including, bank loans and overdrafts or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credit, hire purchase or finance lease commitments, guarantees or other material contingent liabilities.

Save as aforesaid, the Directors confirm that there has been no material change to the indebtedness and contingent liabilities of the Enlarged Group since 31 January 2008 and up to the Latest Practicable Date.

5. MATERIAL ADVERSE CHANGE

The Directors confirm that there is no material adverse changes in the financial or trading position of the Group since 31 December 2006, the date to which the latest audited consolidated financial statements of the Group were made.

– 78 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

6. MANAGEMENT DISCUSSION AND ANALYSIS

For the six months ended 30 June 2007

Business review

For the six months ended 30 June 2007, the Group recorded an unaudited turnover of approximately HK$291,366,000, representing a decrease of 10.33% from approximately HK$324,920,000 for the same period in the previous year. The Group’s unaudited loss attributable to shareholders amounted to HK$19,239,000 compared with a profit of approximately HK$6,266,000 for the previous corresponding period. Loss per share was HK4.03 cents (2006 comparative figures for the same period: earnings per share HK1.31 cents). The loss was mainly due to stagnant sales and the persisting high levels of production cost as a result of fluctuating raw materials prices. Rise in wages and shortage of labor in Guangdong also further eroded the Group’s bottom line.

During the period under review, the Group continued to face severe challenges. The Group’s major markets remained sluggish. Demand for household products slackened while competition was fierce that resulted in intense pressure on profit margins. To enhance the quality of earnings, the Groups focused its efforts on orders with better profit margin rather than low margin sales orders, which eventually led to a decline in sales.

Bigfield Goldenford Holdings Limited

Bigfield Goldenford Holdings Limited (“Bigfield Goldenford”) recorded a half year turnover of approximately HK$165 million, a decrease of 6.35% from that of the previous corresponding period. Net loss for the period enlarged by 484% to approximately HK$16.14 million as compared to a loss of approximately HK$2.76 million in the first half of 2006.

Frankie Dominion (Holdings) Limited

Frankie Dominion (Holdings) Limited also recorded a decline in business operation during the period. Turnover decreased by 16.27% to approximately HK$132.12 million for the six months ended 30 June 2007 as compared to approximately HK$157.79 million for the same period in 2006.

Finance costs

As a result of decreasing bank borrowings, finance costs slightly dropped to 0.78% of the Group’s turnover as at 30 June 2007 compared with 0.91% as at 30 June 2006.

– 79 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Charges over assets

Save for a bank deposit of approximately HK$2.9 million (2006: approximately HK$2.7 million), no other property, plant and equipment with any carrying value is pledged to any bank to secure banking facilities granted to subsidiaries.

Net asset value

As at 30 June 2007, net assets attributable to equity holders of the Company amounted to approximately HK$203.81 million (2006: approximately HK$209.17 million), equivalent to approximately HK$0.426 (2006: approximately HK$0.438) per share.

Liquidity and financial resources

Net current assets and current ratio were approximately HK$88,770,000 and 1.53:1 as at 31 December 2006 and approximately HK$80,653,000 and 1.54:1 as at 30 June 2007. A slight increase in current ratio is largely due to a decrease in bank borrowings.

The Group’s bank balances and cash equivalents amounted to approximately HK$57,841,000 as at 30 June 2007 (31 December 2006: approximately HK$81,424,000) and bank borrowings amounted to approximately HK$55,780,000 (31 December 2006: approximately HK$70,028,000). Therefore, the calculation of net debt to equity ratio was not applicable because the Group had surplus cash of approximately HK$2,061,000 over bank borrowings (31 December 2006: approximately HK$11,396,000).

As at 30 June 2007, the Group did not engage in foreign currency speculation or any financial instrument used for hedging purposes.

The gearing ratio (defined as total liabilities over the total assets) of the Group as at 30 June 2007 was approximately 42.98%.

The Group generally finances its business with internally generated cash flows and revolving credit facilities provided by the Group’s principal bankers. With net current assets of approximately HK$80,653,000 the management believes that the Group has sufficient financial resources to discharge its debts and to finance its daily operations and capital expenditure.

Prospects

The outlook for the household product manufacturing industry will remain extremely challenging. In this difficult operating environment, the Group is facing a rise in raw material and labor costs, gradual appreciation of Renminbi and shareholders’ expectation of improved bottom-line. The first two are results of the shifts in the macroeconomic environment and has an impact upon the final one. As

– 80 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

a manufacturer in Guangdong, the Group cannot change the macroeconomic environment. Nevertheless, the Group can ride on the mega trend and provide reasonable returns to its shareholders. To cope with changes in the macroeconomic environment, the Group will adopt the strategies in cost control, innovation and high efficiency.

Cost control is one of the most important means for improving our bottomline. Apart from streamlining our workforce, the Group will instill cost efficacy consciousness into all of the staff. With the implementation of various cost control measures, the management is confident to maintain our production and administrative costs at a competitive level. The Group’s research and development team has strong innovative capabilities in developing new products and they can enrich the product mix with enhanced features meeting market needs and commanding better price and margins. The Group continues to implement various measures to strive higher operational efficiency and lower wastage at all levels of the Group. The Group will further its efforts on negotiation with customers for increasing the prices.

With all of the above measures in place, the management is confident that the Group will be able to improve its results in the second half of 2007 and meet the shareholders’ expectation.

Other information

Employees and remuneration

As at 30 June 2007, the Group had approximately 3,850 employees (31 December 2006: approximately 4,500 employees). Less than 100 staff are stationed in Hong Kong and the rest are PRC workers. The Group’s staff cost amounted to approximately HK$45.20 million for the six months ended 30 June 2007 and approximately HK$39.38 million for the corresponding period of last year.

Employees are remunerated according to the nature of the job and market trends, with a built-in merit component incorporated in the annual increment and a year-end performance bonus to reward and motivate individual performance. No share option has been granted under the share option scheme adopted by the Company up to the date of this report.

For the year ended 31 December 2006

Geographical Market

The Group’s turnover in the year ended 31 December 2006 decreased by 4.38% to approximately HK$714,731,000 compared to the corresponding period in 2005 of approximately HK$747,483,000. The dominant markets in Europe constituted 56.53% of the turnover amounting to approximately HK$404,056,000 (2005: 64.05% amounting

– 81 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

to HK$478,751,000). North American sales, as a percentage of turnover increased by 7.42% to 32.61% amounting to approximately HK$233,107,000 (2005: 25.19% amounting to HK$188,270,000). South American sales slightly increased to 0.53% amounting to approximately HK$3,810,000 (2005: 0.47% amounting to HK$3,492,000). Sales in other markets increased to the amount of approximately HK$36,819,000 (2005: HK$33,814,000). Product sales in the Hong Kong market constituted 5.17% of the turnover amounting to approximately HK$36,937,000 (2005: 5.77% amounting to HK$43,153,000).

Gross Profit

The Group’s gross profit margin was 9.69% (2005: 9.68%), an increase of one basis point from 2005. Management continues to work on margin improvement, mainly by offering meaningfully differentiated and high value-added products and reducing cost of goods through better sources and cost control.

Product Categories

Sales of the major products out of the Group’s turnover in 2006 were 25.65% for paper products (2005: 33.92%), 31.93% for wooden products (2005: 26.74%) and 42.42% for household items, home textiles products and tablemats (2005: 39.34%).

Finance Costs

Interest expenses increased by 9.8% to approximately HK$5,793,000 in 2006 (2005: HK$5,276,000) as a result of increasing interest rates on bank borrowings during the year.

Charges over assets

Save for a bank deposit of approximately HK$2.8 million (2005: HK$2.7 million), no other property, plant and equipment with any carrying value is pledged to banks to secure banking facilities granted to subsidiaries.

Exposure to fluctuations in exchange rates and related hedges

All transactions of the Group are denominated in Hong Kong dollars, United States dollars and Renminbi. Transactions in foreign currency are translated at the rates prevailing on the dates of the transactions or at the contracted settlement rate. The exchange rates between these currencies were stable during the year under review, save in respect of the gradual appreciation of Renminbi against US dollars and Hong Kong dollars. No hedging for foreign exchange was used given the Group’s exposure to currency fluctuation was still relatively limited.

– 82 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Liquidity and financial resources

Net current assets and current ratio were approximately HK$80,311,000 and 1.46:1 as at 31 December 2005 and approximately HK$88,770,000 and 1.53:1 as at 31 December 2006. The increase in net current assets is largely due to a decrease in bank borrowings. Raw material, work-in-progress and finished goods increased by 0.88% to approximately HK$67,563,000 (2005: HK$66,976,000).

As at 31 December 2006, the Group’s bank balance and cash amounted to approximately HK$81,424,000 (2005: HK$105,061,000) and bank borrowings amounted to approximately HK$70,028,000 (2005: HK$82,316,000). Therefore, the calculation of net debt to equity ratio was not applicable because the Group had surplus cash of approximately HK$11,396,000 over bank borrowings (2005: HK$22,745,000).

The gearing ratio (defined as total liabilities over the total assets) of the Group as at 31 December 2006 was approximately 43.59% (2005: 42.44%).

The Group generally finances its business with internally generated cash flows and revolving credit facilities provided by the Group’s principal bankers. With net current assets of approximately HK$88,770,000, the management believes that the Group has sufficient financial resources to discharge its debts and to finance its daily operations and capital expenditure.

Employees and remuneration

The approximate number of employees of the Group as at 31 December 2006 and 31 December 2005 were 4,500 and 4,800 respectively with a seasonal high figure of more than 4,800 during the third quarter of 2006. Fewer than 100 staff are stationed in Hong Kong and the rest are PRC workers.

Employees are remunerated according to the nature of the job and market trends, with a built-in merit component incorporated in the annual increment and a year-end performance bonus to reward and motivate individual performance. There was no share option granted to any employee during the year.

For the year ended 31 December 2005

Geographical Market

The Group’s turnover in the year ended 31 December 2005 decreased by 15.73% to approximately HK$747,483,000 compared to the corresponding period in 2004 of approximately HK$887,025,000. The dominant markets in Europe constituted 64.05% of the turnover amounting to approximately HK$478,751,000 (2004: 61.98% amounting to HK$549,802,000). North American sales, as a percentage of turnover decreased by 2.84% to 25.19% amounting to approximately HK$188,270,000 (2004: 28.03% amounting to HK$248,592,000). South American sales slightly increased to 0.47%

– 83 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

amounting to approximately HK$3,492,000 (2004: 0.30% amounting to HK$2,690,000). Sales in other markets decreased to the amount of approximately HK$33,814,000 (2004: HK$38,801,000). Product sales in the Hong Kong market constituted 5.77% of the turnover amounting to approximately HK$43,153,000 (2004: 5.31% amounting to HK$47,139,000).

Gross Profit

The Group’s gross profit margin was 9.68% (2004: 13.10%), a decrease of 342 basis points from 2004. Management will continue to work on margin improvement, mainly by offering meaningfully differentiated and high value-added products and reducing cost of goods through better sources and cost controlling.

Product Categories

Sales of the major products out of the Group’s turnover in 2005 were 33.92% for paper products (2004: 35.26%), 26.74% for wooden products (2004: 26.63%) and 39.34% for household items, home textiles products and tablemats (2004: 38.11%).

Finance Costs

Interest expenses increased by 17.61% to approximately HK$5,276,000 in 2004 (2004: HK$4,486,000) as a result of an increase in bank borrowings during the year.

Charges over assets

Save for a bank deposit of approximately HK$2.7 million (2004: HK$2.7 million), no other property, plant and equipment with any carrying value is pledged to bank to secure banking facilities granted to subsidiaries.

Exposure to fluctuations in exchange rates and related hedges

All transactions of the Group are denominated in Hong Kong dollars, United States dollars and Renminbi. Transactions in foreign currency are translated at the rates ruling on the dates of the transactions or at the contracted settlement rate. As the exchange rates of these currencies were stable during the year under review, no hedging or other alternatives had been implemented. The Group does not engage in foreign currency speculation.

Liquidity and financial resources

Net current assets and current ratio were approximately HK$92,133,000 and 1.57: 1 as at 31 December 2004 and approximately HK$80,311,000 and 1.46:1 as at 31st December, 2005. The decrease in net current assets is largely due to an increase of bank borrowings, creditors, bills payable and accrued charges. Raw material, work-in-progress and finished goods decreased by 12.87% to approximately HK$66,976,000 (2004: HK$76,867,000).

– 84 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

As at 31 December 2005, the Group’s bank balance and cash amounted to approximately HK$105,061,000 (2004: HK$114,158,000) and bank borrowings amounted to approximately HK$82,316,000 (2004: HK$80,867,000). Therefore, the calculation of net debt to equity ratio was not applicable because the Group had surplus cash of approximately HK$22,745,000 over bank borrowings (2004: HK$33,291,000).

The gearing ratio (defined as total liabilities over the total assets) of the Group as at 31 December 2005 was approximately 42.44% (2004: 38.06%).

The Group generally finances its business with internally generated cash flows and revolving credit facilities provided by the Group’s principal bankers. With net current assets of approximately HK$80,311,000, the management believes that the Group has sufficient financial resources to discharge its debts and to finance its daily operations and capital expenditure.

Employees and remuneration

The approximate number of employees of the Group as at 31 December 2005 and 31 December 2004 were 4,800 and 5,000 respectively with a seasonal high figure of more than 5,200 during the third quarter of 2005. Less than 100 staff are stationed in Hong Kong and the rest are PRC workers.

Employees are remunerated according to the nature of the job and market trends, with a built-in merit component incorporated in the annual increment and a year-end performance bonus to reward and motivate individual performance. There was no share option granted to any employee during the year.

For the year ended 31 December 2004

Geographical market

The Group’s turnover in the year ended 31 December 2004 decreased by 10.40% to approximately HK$887,025,000 compared to the corresponding period in 2003 of HK$989,942,000. The dominant markets in Europe constituted 61.98% of the turnover, amounting to approximately HK$549,802,000 (2003: 51.22% amounting to HK$507,055,000). North American sales, as a percentage of turnover decreased by 11.76% to 28.03% amounting to approximately HK$248,592,000 (2003: 39.79% amounting to HK$393,903,000). South American sales slightly decreased to 0.30% amounting to approximately HK$2,690,000 (2003: 0.34% amounting to HK$3,372,000). Sales in other markets slightly decreased to the amount of approximately HK$38,802,000 (2003: HK$40,306,000). Product sales in the Hong Kong market increased to 5.31% amounting to approximately HK$47,139,000 (2003: 4.58% amounting to HK$45,304,000).

– 85 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Gross profit

The Group’s gross profit margin was 13.10% (2003: 13.59%), a decrease of 49 basis points from 2003. Management will continue to work on margin improvement, mainly by offering meaningfully differentiated and high value-added products and reducing cost of goods through better sources and cost controlling.

Product categories

Sales of the major products out of the Group’s turnover in 2004 were 35.26% for paper products (2003: 38.44%), 26.63% for wooden products (2003: 31.96%) and 38.11% for household items, home textiles products and tablemats (2003: 29.60%).

Interest expenses

Interest expenses decreased by 12.72% to approximately HK$4,487,000 in 2004 (2003: HK$5,140,000) as a result of a decrease in bank borrowings during the year.

Charges over assets

Save for a bank deposit of approximately HK$2.7 million (2003: HK$2.7 million), no other property, plant and equipment with any carrying value (2003: HK$24 million) is pledged to bank to secure banking facilities granted to subsidiaries.

Exposure to fluctuations in exchange rates and related hedges

Liquidity and financial resources

Net current assets and current ratio were approximately HK$121,074,000 and 1.75: 1 as at 31 December 2003 and approximately HK$91,734,000 and 1.57:1 as at 31 December 2004. The decrease in net current assets is largely due to a decline in debtors and stock. Raw material, work-in-progress and finished goods decreased by 10.53% to approximately HK$76,867,000 (2003: approximately HK$85,911,000).

As at 31 December 2004, the Group’s bank balance and cash amounted to approximately HK$101,256,000 (2003: HK$90,044,000) and bank borrowings and obligation under finance leases amounted to approximately HK$80,867,000 (2003: HK$63,625,000). Therefore, the calculation of net debt to equity ratio was not applicable because the Group had surplus cash of approximately HK$20,389,000 over bank borrowings and obligation under finance leases (2003: HK$26,419,000).

– 86 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The gearing ratio (defined as total liabilities over the total assets) of the Group as at 31 December 2004 was approximately 38.06% (2003: 37.00%).

The Group generally finances its business with internally generated cash flows and revolving credit facilities provided by the Group’s principal bankers. With net current assets of approximately HK$91,734,000, the management believes that the Group has sufficient financial resources to discharge its debts and to finance its daily operations and capital expenditure.

Employees and remuneration

The approximate number of employees of the Group as at 31 December 2004 and 31 December 2003 were 5,000 and 6,500 respectively with a seasonal high figure of more than 6,500 during the third quarter of 2004. Less than 100 staff are stationed in Hong Kong and the rest are PRC workers.

Employees are remunerated according to the nature of the job and market trends, with a built-in merit component incorporated in the annual increment and a year-end performance bonus to reward and motivate individual performance. There was no share option granted to any employee during the year.

– 87 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the independent reporting accountants, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants, Hong Kong.

==> picture [193 x 72] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

20 March 2008

The Directors

Frankie Dominion International Limited

1[st] Floor, Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang HONG KONG

Dear Sirs,

We set out below our report on the financial information relating to Huscoke International Group Limited (“Huscoke”) and its subsidiary (hereinafter collectively referred to as the “Huscoke Group”) including the consolidated balance sheets of Huscoke Group as at 31 December 2005, 2006 and 2007, the consolidated income statements, the consolidated statements of changes in equity and the consolidated cash flow statements of Huscoke Group for the period from 26 January 2005 (date of incorporation) to 31 December 2005, for each of the two years ended 31 December 2006 and 2007 (hereinafter collectively referred to as the “Relevant Period I”), and the notes thereto (the “Financial Information”), for inclusion in the circular of Frankie Dominion International Limited (the “Company”) dated 20 March 2008 (the “Circular”).

On 11 January 2008, Rich Key Enterprises Limited (the “Purchaser”), a whollyowned subsidiary of the Company, entered into a conditional sale and purchase agreement (the “Sale and Purchase Agreement”) with Mr. Wu Jixian (the “Vendor”) pursuant to which the Purchaser has agreed to acquire and the Vendor has agreed to sell or procure to sell:

(i) the entire issued share capital in Pride Eagle Investments Limited (“Pride Eagle”), a company incorporated in the British Virgin Island on 28 November 2007 with limited liability and the face value of the loans outstanding as at the completion of the acquisition (the “First Acquisition”) in accordance with the terms and conditions of the Sale and Purchase Agreement (the “First Completion”) made by or on behalf of the Vendor to Pride Eagle (the “First Sale Debts”).

– 88 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

(ii) the entire issued share capital in Joy Wisdom International Limited (“Joy Wisdom”), a company incorporated in the British Virgin Islands with limited liability on 20 September 2007 and the face value of the loans outstanding as at the completion of the acquisition (the “Second Acquisition”) in accordance with the terms and conditions of the Sale and Purchase Agreement (the “Second Completion”) made by or on behalf of the Vendor to Joy Wisdom (the “Second Sale Debts”).

First Acquisition and Second Acquisition would be satisfied at an aggregrate consideration of HK$2,400 million (subject to adjustment) comprising HK$1,200 million (subject to adjustment) for First Acquisition and HK$1,200 million (subject to adjustment) for Second Acquisition. In each case, such consideration shall be satisfied by (i) HK$1,100 million by the Company issuing convertible bonds at First Completion (the “Tranche 1 Bonds”) and another HK$1,100 million by the Company issuing convertible bonds at Second Completion (the “Tranche 2 Bonds”); and HK$100 million in each case, by the Purchaser to issue the promissory note (the “Promissory Note”) or in cash (solely at the option of the Purchaser) for the settlement of First Completion and Second Completion respectively.

Huscoke was incorporated in Hong Kong on 26 January 2005 with limited liability. The registered office of Huscoke is located at Unit 1615, 16/F., Tower 2, Lippo Centre, 89 Queensway, Hong Kong. The principal activity of Huscoke Group is trading of coke.

As at the date of this report, Huscoke Group is 100% owned by Pride Eagle. The financial statements of Huscoke for the years ended 31 December 2005 and 2006 were audited by Paddy W. T. To, Certified Public Accountant and no audited financial statements of Huscoke Group have been prepared for the year ended 31 December 2007. For the purpose of this report, the directors of the Company have prepared the consolidated financial statements of Huscoke Group for year ended 31 December 2007 in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”). Huscoke has adopted 31 December as its financial year end date.

BASIS OF PREPARATION

The Financial Information has been prepared by the directors of Huscoke based on the audited financial statements or, where appropriate, unaudited financial statements of Huscoke Group for the Relevant Period I, on the basis as set out in Note 3 below. The Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards which also include Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and accounting principles generally accepted in Hong Kong.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL INFORMATION

The directors of Huscoke are responsible for the preparation and the true and fair presentation of the Financial Information in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and the true and fair presentation of Financial Information that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The directors of the Company are responsible for the contents of the Circular in which this report is included.

– 89 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Financial Information based on our audit. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the Financial Information is free from material misstatement. We have also carried out additional procedures as necessary in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Information. The procedures selected depend on the reporting accountants’ judgment, including the assessment of the risks of material misstatement of the Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation and true and fair presentation of the Financial Information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Financial Information.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, for the purpose of this report, the Financial Information for Relevant Period I gives a true and fair view of the state of affairs of Huscoke Group as at 31 December 2005, 2006 and 2007 and of the results and cash flows of Huscoke Group for the Relevant Period I in accordance with Hong Kong Financial Reporting Standards.

MATERIAL UNCERTAINTIES RELATING TO THE GOING CONCERN BASIS OF HUSCOKE GROUP

Without qualifying our opinion, we draw attention to Note 3 in the Financial Information which indicates that Huscoke Group incurred accumulated loss of HK$727,000, HK$3,645,000 and HK$15,644,000 as at 31 December 2005, 2006 and 2007 and net liabilities of HK$717,000, HK$3,635,000 and HK$15,634,000 as at 31 December 2005, 2006 and 2007. These conditions, along with other matters as set forth in Note 3, indicate the existence of a material uncertainty which may cast significant doubt about Huscoke Group’s ability to continue as a going concern.

– 90 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

I. FINANCIAL INFORMATION

CONSOLIDATED INCOME STATEMENTS

Notes
Turnover
7
Cost of sales
Gross profit
Other revenue
7
Change in fair value of
investment properties
16
Impairment loss in respect of
amount due from the
immediate holding company
Administrative expenses
Operating expenses
Loss from operating activities
8
Finance costs
11
Loss before taxation
Taxation
12
Loss for the year/period
Attributable to:
Equity holders of Huscoke
Loss per share
– Basic and diluted,
in HK dollar
13

For the period
from 26 January
2005 (date of
Year ended
incorporation) to
31 December
31 December
2007
2006
2005
HK$’000
HK$’000
HK$’000
116,003
–
14,440
(98,996)
–
(13,609)
17,007
–
831
1,749
105
144
10,031
–
–
(28,590)
–
–
(4,948)
(1,329)
(801)
(3,464)
(889)
(493)
(8,215)
(2,113)
(319)
(982)
(805)
(408)
(9,197)
(2,918)
(727)
(2,802)
–
–
(11,999)
(2,918)
(727)
(11,999)
(2,918)
(727)
(1,200)
(292)
(73)

– 91 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

CONSOLIDATED BALANCE SHEETS

Notes Non-current assets Property, plant and equipment 14 Prepaid lease payments 15 Investment properties 16 Current assets Deposit, prepayments and other receivables 17 Payment in advance Prepaid lease payments 15 Amount due from a related company 18 Amount due from a director 19 Bank balances and cash 20 Current liabilities Creditors and other payables 21 Receipt in advance Amount due to the immediate holding company 22 Amount due to a related company 22 Amount due to a director 23 Tax payable Bank borrowings 24 Bank overdrafts 20 Net current liabilities	2007 HK$’000 11,602 50,845 57,300 119,747 18,826 78,000 417 – – 3,882 101,125 3,909 156,000 – 271 11,107 1,075 6,383 – 178,745 (77,620) 42,127	At 31 December 2006 2005 HK$’000 HK$’000 3,890 3,998 12,199 12,296 – – 16,089 16,294 41 34 – – 97 97 65 14 1,771 1,006 3,441 3,349 5,415 4,500 350 70 – – 1,213 7,769 – – 11,167 283 – – 901 842 3,090 3,228 16,721 12,192 (11,306) (7,692) 4,783 8,602

– 92 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Notes Capital and reserves attributable to equity holders of Huscoke Share capital 25 Accumulated loss Total equity Non-current liabilities Deferred tax liabilities Bank borrowings 24	2007 HK$’000 10 (15,644) (15,634) 1,727 56,034 57,761 42,127	At 31 December 2006 2005 HK$’000 HK$’000 10 10 (3,645) (727) (3,635) (717) – – 8,418 9,319 8,418 9,319 4,783 8,602

– 93 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 26 January 2005 Loss for the period At 31 December 2005 and 1 January 2006 Loss for the year At 31 December 2006 and 1 January 2007 Loss for the year At 31 December 2007	Share Accumulated capital loss HK$’000 HK$’000 10 – – (727) 10 (727) – (2,918) 10 (3,645) – (11,999) 10 (15,644)	Total HK$’000 10 (727) (717) (2,918) (3,635) (11,999) (15,634)

– 94 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

CONSOLIDATED CASH FLOW STATEMENTS

			For the period
			from 26 January
			2005 (date of
	Year ended		incorporation) to
	31 December		31 December
	2007	2006	2005
	HK$’000	HK$’000	HK$’000
Operating activities
Loss before taxation	(9,197)	(2,918)	(727)
Adjustments for:
Release of prepaid lease payments	417	97	97
Depreciation of property, plant
and equipment	381	113	133
Impairment loss in respect of
amount due from the immediate
holding company	28,590	–	–
Change in fair value of
investment properties	(10,031)	–	–
Interest expense	982	805	408
Interest income	(97)	(97)	(40)
Operating cash flows before
movements in working capital	11,045	(2,000)	(129)
Increase in deposit, prepayments
and other receivables	(18,785)	(7)	(34)
Increase in payment in advance	(78,000)	–	–
Increase in amount due from
the immediate holding company	(28,590)	–	–
Decrease/(Increase) in amount
due from a related company	65	(51)	(14)
Decrease/(Increase) in amount
due from a director	1,771	(765)	(1,006)
Increase in creditors and other payables	3,559	280	70
Increase in receipt in advance	156,000	–	–
(Decrease)/Increase in amount due to
the immediate holding company	(1,213)	(6,556)	7,769
Increase in amount due to
a related company	271	–	–
(Decrease)/Increase in amount
due to a director	(60)	10,884	283
Cash generated from operations	46,063	1,785	6,939
Interest paid	(294)	(230)	(87)
Net cash generated from
operating activities	45,769	1,555	6,852

– 95 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

			For the period
			from 26 January
			2005 (date of
	Year ended		incorporation) to
	31 December		31 December
	2007	2006	2005
	HK$’000	HK$’000	HK$’000
Investing activities
Purchase of investment properties	(47,269)	–	–
Purchase of property, plant
and equipment	(8,093)	(5)	(4,131)
Increase in prepaid lease payments	(39,383)	–	(12,490)
Interest received	97	97	40
Net cash (used in)/generated from
investing activities	(94,648)	92	(16,581)
Financing activities
New bank borrowings raised	54,000	–	10,740
Repayment of bank borrowings	(902)	(842)	(579)
Interest paid	(688)	(575)	(321)
Proceeds from issue of shares	–	–	10
Net cash generated from/(used in)
financing activities	52,410	(1,417)	9,850
Net increase in cash and cash equivalents	3,531	230	121
Cash and cash equivalents
at beginning of the year/period	351	121	–
Cash and cash equivalents
at end of the year/period	3,882	351	121

Analysis of the balances of cash
and cash equivalents
Bank balances and cash	3,882	3,441	3,349
Bank overdrafts	–	(3,090)	(3,228)
	3,882	351	121

– 96 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

II. NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

Huscoke was incorporated in Hong Kong on 26 January 2005 with limited liability. The address of registered office of Huscoke is at Unit 1615, 16/F., Tower 2, Lippo Centre, 89 Queensway, Hong Kong. The principal activity of Huscoke is trading of coke business.

The Financial Information is presented in Hong Kong dollars, which is the functional currency of Huscoke Group.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

The following new standards, amendment to standards and interpretations that have been issued but are effective for the accounting periods commencing on 1 January 2007 have not been early adopted:

HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKFRS 8 Operating Segments[1] HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share Transactions[2] HK(IFRIC)-Int 12 Service Concession Arrangements[3] HK(IFRIC)-Int 13 Customer Loyalty Programmes[4] HK(IFRIC)-Int 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[3]

1 Effective for annual period beginning on or after 1 January 2009.
2 Effective for annual period beginning on or after 1 March 2007. 3 Effective for annual period beginning on or after 1 January 2008. 4 Effective for annual period beginning on or after 1 July 2008.

The directors of Huscoke anticipate that the application of these standards, amendments or interpretations will have no material impact on the results and financial position of the Huscoke Group.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Financial Information have been prepared in accordance with HKFRSs (which also include Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA, accounting principles genrally accepted in Hong Kong. The Financial Information is presented in Hong Kong dollars, which is the functional currency of Huscoke Group and all values are rounded to the nearest thousand (HK$’000) except otherwise stated.

At 31 December 2005, 2006 and 2007, Huscoke had net liabilities of approximately HK$717,000, HK$3,635,000 and HK$15,634,000 respectively. The shareholder of Huscoke, has confirmed that, it is their intention to provide continuing financial support to Huscoke, subject to the condition that the relationship between the directors and Huscoke does not change, so as to enable it to meet its liabilities as and when they fall due and to continue its business for the foreseeable future. The directors believe that Huscoke will continue as going concern. Consequently, the Financial Information has been prepared on a going concern basis.

The preparation of Financial Information in conformity with HKFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions are reviewed on an ongoing

– 97 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of HKFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustments in the next year are discussed in Note 5 to the Financial Information.

A summary of the significant accounting policies followed by the Huscoke Group in the preparation of the Financial Information is set out below:

Basis of preparation

The measurement basis used in the preparation of the Financial Information is historical cost except for certain financial assets and financial liabilities which have been carried at fair value as explained below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of Huscoke Group. Control is achieved where Huscoke has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Huscoke Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

On acquisition of additional interest in subsidiaries, goodwill was calculated as the difference between the consideration paid for the additional interest and the carrying amount of the net assets of the subsidiaries attributable to the additional interest acquired. If the Huscoke Group’s additional interest in the net assets of the subsidiaries exceeds the consideration paid for the additional interest, the excess is recognised in the consolidated income statement.

Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Huscoke Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 Business Combinations are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Huscoke Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Huscoke Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

– 98 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Leasehold land and building

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year in which the item is derecognised.

Leasing

Rentals income from operating leases is recognised in the income statement on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as expenses on a straight-line basis over the lease term.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other shortterm highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

Revenue recognition

Sales of goods are recognised when goods are delivered and title has passed.

Service income are recognised when services are provided.

– 99 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Borrowing costs

All borrowing costs are recognised as and included in finance costs in the consolidated income statement in the period in which they are incurred.

Foreign currencies

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the year in which they arise, except for exchange differences arising on a monetary item that forms part of the Huscoke’s net investment in a foreign operation, in which case, such exchange differences are recognised in equity in the consolidated financials statements.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Huscoke Group’s foreign operations are translated into the presentation currency of the Huscoke Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the year, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised in profit or loss in the year in which the foreign operation is disposed of.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when an entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

– 100 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss represent financial assets held for trading. The Huscoke Group classified certain financial assets as investments held for trading. At each balance sheet date subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with changes in fair value recognised directly in profit or loss in the year in which they arise.

Loans and receivables

Available-for-sale financial assets

Financial liabilities and equity

Financial liabilities

Financial liabilities including creditors, bills payable, amount due to an associate and bank borrowings are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

– 101 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Huscoke Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Huscoke Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where Huscoke Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to entity, in which case the deferred tax is also dealt with in equity.

Retirement benefit costs

– 102 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Related party transactions

Parties are considered to be related to Huscoke Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, Huscoke Group; (ii) has an interest in Huscoke Group that gives it significant influence over Huscoke Group; (iii) has joint control over Huscoke Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of Huscoke Group or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, joint-controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of the employees of Huscoke Group, of any entity that is related party of Huscoke Group.

A transaction is considered to be a related party transaction where there is a transfer of resources or obligations between related parties.

Provisions

Provisions are recognised when Huscoke Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligations, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligations.

Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Huscoke Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the Financial Information. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of Huscoke Group. A contingent asset is not recognised but is disclosed in the notes to the Financial Information when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

– 103 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

4. FINANCIAL RISK MANAGEMENT

Impairment losses

At each balance sheet date, Huscoke Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Financial risk management objectives and policies

Huscoke Group’s activities exposes it a variety of financial risks: credit risk, foreign exchange risk, liquidity risk and cash flow and fair value interest-rate risk. Huscoke Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Huscoke Group’s financial performances.

(i) Credit risk

Huscoke Group’s maximum exposure to credit risk in the event of the counterparties failure to perform their obligations as at the consolidated balance date in relation to each class of recognised financial assets is the carrying amount of those assets in the consolidated balance sheet.

In order to minimise the credit risk, Huscoke Group reviews the recoverable amount of each individual counterparty at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts.

(ii) Foreign exchange risk

Huscoke Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Hong Kong dollar and United States dollar. Foreign exchange risk mainly arises from normal commercial transactions. Huscoke Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency should the need arise.

Sensitivity analysis

Huscoke Group is mainly exposed to the effects of fluctuation in United States dollar. Since there is linked currency relationship between Hong Kong dollar and United States dollar, the effects of fluctuation in United States dollar is minimal to Huscoke Group.

(iii) Liquidity risk

Huscoke Group had net current liabilites of approximately HK$7,692,000, HK$11,306,000 and HK$77,620,000 as at 31 December 2005, 2006 and 2007 respectively. These indicate the existence of a material uncertainty which may cast significant doubt about Huscoke Group’s ability to continue as a going concern.

Huscoke Group manages its liquidity risk by regularly monitoring current and expected liquidity requirements and ensuring sufficient liquid cash and intended lines of funding from major financial institutions to meet its liquidity requirements in the short and long terms.

– 104 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

(iv) Cash flow and fair value interest-rate risk

Huscoke Group is exposed to cash flow and fair value interest-rate risk through the impact of rate changes on interest bearing financial assets and liabilities. Interest bearing financial assets are mainly deposits with banks whereas interest bearing financial liabilities are mainly the bank overdrafts and borrowings. Huscoke Group does not have interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arises.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rate for interest bearing borrowing at the balance sheet date. For variable rate borrowings, the analysis is prepared assuming the amount of borrowings held at the balance sheet date was held for the whole Relevant Period I. A 50 basis point increase or decrease in prime lending rate is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Huscoke Group’s:

loss for the year ended 31 December 2007 would increase/decrease by approximately HK$312,000 (2006: HK$62,000; 2005: HK$67,000). This is mainly attributable to Huscoke Group’s exposure to interest rates on its variable rate borrowings; and
other equity reserves would not decrease/increase (2006: Nil).

Huscoke Group’s sensitivity to interest rates has increased during the current period mainly due to the increase in carrying amount of borrowings as at the balance sheet date.

Capital risk management

Huscoke Group’s objectives when managing capital are to safeguard Huscoke Group’s ability to continue as a going concern in order to provide returns for the shareholder and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, Huscoke Group may adjust the amount of dividends paid to the shareholder, return capital to the shareholder, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, Huscoke Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including borrowings and bank overdrafts, as shown in the balance sheet) less cash and bank balances. Total capital is calculated as equity, as shown in the balance sheet, plus net debt.

– 105 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

Huscoke Group’s strategy is to maintain a reasonable gearing ratio. During the Relevant Period I, the gearing ratios are as follows:

Total borrowings _Less:_Cash and bank balances Net debt Total equity Total capital Gearing ratio	At 31 December 2007 2006 HK$’000 HK$’000 62,417 12,409 (3,882) (3,441) 58,535 8,968 (15,634) (3,635) 42,901 5,333 136% 168%	2005 HK$’000 13,389 (3,349) 10,040 (717) 9,323 108%

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Huscoke Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of assets

Huscoke Group tests annually whether the assets have suffered any impairment. The recoverable amount of an asset or a cash generating unit is determining based on value-in-use calculations which require the use of assumptions and estimates.

(b) Useful lives of property, plant and equipment

In accordance with HKAS 16, Huscoke Group estimates the useful lives of property, plant and equipment in order to determine the amount of depreciation expenses to be recorded. The useful lives are estimated at the time the asset is acquired based on historical experience, the expected usage, wear and tear of the assets, as well as technical obsolescence arising from changes in the market demands or service output of the assets. Huscoke Group also perform annual reviews on whether the assumptions made on useful lives continue to be valid.

(c) Fair value estimation

The carrying amounts of Huscoke Group’s financial assets and financial liabilities, including amounts due from related companies and director, prepayment and other receivables, borrowings, trade and other payables and amounts due to holding company and director, approximate their fair values due to their short maturities. The face values less any credit adjustments for financial liabilities with a maturity of less than one year are assumed to approximate their fair values.

– 106 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

6. SEGMENT INFORMATION

During the Relevant Period I, Huscoke Group’s entire turnover was derived from the sales of coke in Hong Kong, no business and geographical segmental information on turnover are presented.

At as 31 December 2005, 2006 and 2007, Huscoke Group’s assets and liabilities were located in Hong Kong, no geographical segmental information on assets and liabilities are presented.

7. TURNOVER AND OTHER REVENUE

Turnover represents the aggregate of income from the sales of coke in Hong Kong during the Relevant Period I.

Turnover: Sales of coke Other revenue: Gain on disposal of financial assets at fair value through profit or loss Freight commission Bank interest income Sundry income 8. LOSS FROM OPERATING ACTIVITIES Loss from operating activities is stated after charging: Auditors’ remuneration Release of prepaid lease payments Depreciation of property, plant and equipment Exchange loss Directors’ remuneration Total staff costs	Year ended 31 2007 HK$’000 116,003 407 1,245 97 – 1,749 117,752 Year ended 31 2007 HK$’000 – 417 381 301 580 221	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 – 14,440 – – – – 97 40 8 104 105 144 105 14,584 For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 14 26 97 97 113 133 – – 600 – 117 66

– 107 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

9. DIRECTORS’ REMUNERATION

The remuneration of every director of Huscoke for the Relevant Period I is as follows:

Fees, salaries and other benefits: Mr. Wen Kezhong_(Note 1) Mr. Wu Jixian(Note 2)_	Year ended 31 2007 HK$’000 – 580 580	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 – – 600 – 600 –	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 – – 600 – 600 –
			–

Notes:

Mr. Wen Kezhong was appointed as director on 26 January 2005 and resigned on 28 December 2007.
Mr. Wu Jixian was appointed as director on 26 April 2005.

10. EMPLOYEE BENEFIT EXPENSE

Of the five individuals with the highest emoluments in Huscoke Group, one was the director of Huscoke whose emoluments is included in the disclosure in Note 9 above. The emoluments of the remaining are as follows:

Salaries, allowance and other benefits Pension scheme contributions	Year ended 31 2007 HK$’000 215 6 221	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 112 63 5 3 117 66	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 112 63 5 3 117 66
			66

11. FINANCE COSTS

Interest expenses – bank overdrafts – wholly repayable within five years – borrowings – not wholly repayable within five years	Year ended 31 2007 HK$’000 294 688 982	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 230 87 575 321 805 408	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 230 87 575 321 805 408
			408

– 108 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

12. TAXATION

No provision for Hong Kong Profits Tax has been made for the period ended 31 December 2005 and year ended 31 December 2006 as Huscoke Group had no assessable profits for the period ended 31 December 2005 and year ended 31 December 2006.

Hong Kong Profits has been calculated at the rate of 17.5% on the estimate assessable profits for the year ended 31 December 2007.

Current taxation: Provision for the year/period Deferred taxation: Provision for the year/period	Year ended 31 2007 HK$’000 1,075 1,727 2,802	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 – – – – – –	For the period from 26 January 2005 (date of incorporation) to December 31 December 2006 2005 HK$’000 HK$’000 – – – – – –
			–

The tax charge for the year/period can be reconciled to the profit/(loss) before taxation per the consolidated income statement as follows:

Loss before taxation Tax at Hong Kong profits tax rate of 17.5% Estimated tax effect of expenses not deductible for tax purpose Estimated tax effect of income not taxable for tax purpose Estimated tax effect of unrecognised tax losses Estimated tax effect of utilization of tax loss previously not recognised Estimated tax effect of unrecognised temporary differences Estimated tax effect of recognised temporary differences Tax charge at the Huscoke Group’s effective rate for the year/period	2007 HK$’000 (9,197 ) (1,609 ) 5,109 (1,772 ) – (280 ) (373) 1,727 2,802	Year ended 31 % (17.5) 55.6 (19.3) – (3.0 ) (4.1) 18.8 30.5	December 2006 HK$’000 (2,918 ) (511 ) 40 – 489 – (18 ) – –	% (17.5) 1.4 – 16.7 – (0.6) – –	For the period from 26 January 2005 (date of incorporation) to 31 December 2005 HK$’000 % (727) (127) (17.5 26 3.6 – – 154 21.2 – – (53) (7.3 – – – –	For the period from 26 January 2005 (date of incorporation) to 31 December 2005 HK$’000 % (727) (127) (17.5 26 3.6 – – 154 21.2 – – (53) (7.3 – – – –
						–

– 109 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

13. LOSS PER SHARE

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of Huscoke is based on the following data:

Loss attributable to the equity holders of Huscoke Number of issued ordinary shares	At 31 December 2007 2006 HK$’000 HK$’000 (11,999) (2,918) At 31 December 2007 2006 ’000 ’000 10 10	2005 HK$’000 (727

		2005 ’000 10

Basic and diluted loss per share for the period ended 31 December 2005, and year ended 31 December 2006 and 2007 have been presented in a single line as there were no any dilutive events during the Relevant Period I.

14. PROPERTY, PLANT AND EQUIPMENT

Cost At 26 January 2005 Additions At 31 December 2005 and 1 January 2006 Additions At 31 December 2006 and 1 January 2007 Additions At 31 December 2007 Depreciation and impairment At 26 January 2005 Provided for the period At 31 December 2005 and 1 January 2006 Provided for the year At 31 December 2006 and 1 January 2007 Provided for the year At 31 December 2007 Net book value At 31 December 2007 At 31 December 2006 At 31 December 2005	Leasehold Buildings improvement HK$’000 HK$’000 – – 3,605 230 3,605 230 – – 3,605 230 6,950 – 10,555 230 – – 28 46 28 46 28 37 56 83 85 29 141 112 10,414 118 3,549 147 3,577 184	Motor Vehicle HK$’000 – – – – – 1,100 1,100 – – – – – 220 220 880 – –	Fixtures and equipment HK$’000 – 296 296 5 301 43 344 – 59 59 48 107 47 154 190 194 237	Total HK$’000 – 4,131
				4,131 5
				4,136 8,093
				12,229
				– 133
				133 113
				246 381
				627
				11,602

				3,890

				3,998

At 31 December 2005, 2006 and 2007, the Huscoke Group has pledged buildings having carrying amounts of approximately HK$3,577,000, HK$3,549,000 and HK$10,414,000 respectively.

– 110 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

15. PREPAID LEASE PAYMENTS

		At 31 December
	2007	2006	2005
	HK$’000	HK$’000	HK$’000
In Hong Kong held under:
Long-term lease	51,262	12,296	12,393

At 31 December 2005, 2006 and 2007, the Huscoke Group’s prepaid lease payments having carrying amounts of approximately HK$12,393,000, HK$12,296,000 and HK$51,262,000 respectively have been pledged to secure general banking facilities granted to Huscoke Group.

At 1 January/26 January Additions Release of prepaid lease payments At 31 December Analysed for reporting purposes as: Non-current assets Current assets	At 31 December 2007 2006 HK$’000 HK$’000 12,296 12,393 39,383 – (417) (97) 51,262 12,296 At 31 December 2007 2006 HK$’000 HK$’000 50,845 12,199 417 97 51,262 12,296	2005 HK$’000 – 12,490 (97
		12,393

		2005 HK$’000 12,296 97
		12,393

16. INVESTMENT PROPERTIES

At 26 January 2005, 31 December 2005, 1 January 2006, 31 December 2006 and 1 January 2007 Additions Changes in fair value At 31 December 2007	HK$’000 – 47,269 10,031
	57,300

The fair values of the Huscoke Group’s investment properties as at 31 December 2007 have been arrived at on the basis of a valuation carried out on that date by B.I. Appraisals Limited, an independent qualified professional valuers not connected with the Huscoke Group. B.I. Appraisals Limited has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation, which conforms to The Hong Kong Institute of Surveyors Valuation Standards on Properties (1st Edition 2005) published by the Hong Kong Institute of Surveyors, was based on open market value basis.

All of the Huscoke Group’s property interests held under operating leases to earn rentals purposes are measured using the fair value model and are classified and accounted for as investment properties.

– 111 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

At 31 December 2005 and 2006, no investment properties have been pledged to secure general banking facilities granted to the Group. At 31 December 2007, all Huscoke Group’s investment properties have been pledged to secure general banking facilities granted to the Group.

The carrying amounts of investment properties shown above comprise of:

At 31 December 2007 2006 HK$’000 HK$’000 In Hong Kong held under: Long-term lease 57,300 – DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES At 31 December 2007 2006 HK$’000 HK$’000 Deposits paid 802 34 Prepayment 2 2 Interest receivables – 5 Other receivables_(Note 1)_ 18,022 – 18,826 41	2005 HK$’000 –

	2005 HK$’000 34 – – –
	34

17. DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

Note 1: The other receivables are unsecured, interest-free and repayable on demand.

The directors of Huscoke Group considered that the carrying amounts of deposits, prepayment and other receivables approximate to their fair values.

18. AMOUNT DUE FROM A RELATED COMPANY

Name of company Company in which the director has beneficial interest Huscoke Shipping Company Limited Name of company Company in which the director has beneficial interest Huscoke Shipping Company Limited	Maximum amount outstanding during the year HK$’000 65 Maximum amount outstanding during the year HK$’000 65	2007 HK$’000 –

		2006 HK$’000 65

– 112 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

	Maximum
	amount
	outstanding
	during
Name of company	the period	2005
	HK$’000	HK$’000
Company in which the director has beneficial interest
Huscoke Shipping Company Limited	14	14

As at 31 December 2007, the amount due from a related company has been reversed to the amount due to a related company. The maximum amount outstanding during the year is approximately HK$65,000.

The amount due from a related company is unsecured, interest free and recoverable on demand.

The directors of Huscoke Group considered that the carrying amount of amount due from a related company approximates to its fair value.

19. AMOUNT DUE FROM A DIRECTOR

Director Mr. Wen Kezhong_(Note) Director Mr. Wen Kezhong(Note) Director Mr. Wen Kezhong(Note)_	Maximum amount outstanding during the year HK$’000 2,365 Maximum amount outstanding during the year HK$’000 1,771 Maximum amount outstanding during the period HK$’000 1,006	2007 HK$’000 –

		2006 HK$’000 1,771

		2005 HK$’000 1,006

Note : Mr. Wen Kezhong was resigned as the director of Huscoke on 28 December 2007.

– 113 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

20. BANK BALANCES AND CASH/BANK OVERDRAFTS

Cash at bank and in hand Time deposits Maximum exposure to credit risk	At 31 December 2007 2006 HK$’000 HK$’000 3,882 13 – 3,428 3,882 3,441 3,879 3,440	2005 HK$’000 12 3,337
		3,349

		3,346

Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:

Cash and cash equivalents Bank overdrafts	At 31 December 2007 2006 HK$’000 HK$’000 3,882 3,441 – (3,090) 3,882 351	2005 HK$’000 3,349 (3,228
		121

21. CREDITORS AND OTHER PAYABLES

Trade payables Accruals	At 31 December 2007 2006 HK$’000 HK$’000 3,173 – 736 350 3,909 350	2005 HK$’000 – 70
		70

The following is an aged analysis of trade payables at the balance sheet date:

0-90 days 91-180 days 181-365 days Over 365 days	At 31 December 2007 2006 HK$’000 HK$’000 3,173 – – – – – – – 3,173 –	2005 HK$’000 – – – –
		–

Huscoke Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

– 114 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

22. AMOUNTS DUE TO THE IMMEDIATE HOLDING/RELATED COMPANIES

The amounts due to the immediate holding or related companies are unsecured, interest free and repayable on demand.

The directors of Huscoke Group considered that the carrying amounts of amounts due to the immediate holding and related companies approximate to their fair values.

23. AMOUNT DUE TO A DIRECTOR

The amount due to a director is unsecured, interest free and repayable on demand.

The directors of Huscoke Group considered that the carrying amount of amount due to a director approximates to its fair value.

24. BANK BORROWINGS

Mortgage loan, secured Carrying amount repayable: On demand or within one year More than one year, but not exceeding two years More than two years, but not more than five years More than five years _Less:_Amounts due within one year shown under current liabilities	At 31 December 2007 2006 HK$’000 HK$’000 62,417 9,319 6,383 901 6,431 983 19,602 3,245 30,001 4,190 62,417 9,319 (6,383) (901) 56,034 8,418	2005 HK$’000 10,161
		842 901 3,094 5,324
		10,161 (842
		9,319

The mortgage are secured by Huscoke Group’s leasehold land and buildings.

The mortgage loans are variable-rate borrowings which carry interest of HIBOR+1.25% and prime rate-2% each (2006: prime rate-2%, 2005: prime rate-2%).

Huscoke Group’s borrowings are all denominated in Hong Kong dollars.

25. SHARE CAPITAL

Authorised 10,000 ordinary shares of HK$1 each Issued and fully paid 10,000 ordinary shares of HK$1 each	At 31 December 2007 2006 HK$’000 HK$’000 10 10 10 10	2005 HK$’000 10

		10

On 4 January 2008, the entire issued share capital of Huscoke Group has been transferred from Huscoke Group Holding Limited to Pride Eagle Investments Limited.

– 115 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

26. OPERATING LEASE COMMITMENTS

All of the Huscoke Group’s investment properties are held for rental purposes.

At 31 December 2005, 2006 and 2007, the Huscoke Group had contracted with tenants for the following future minimum lease payments:

Within one year In the second to fifth year inclusive	At 31 December 2007 2006 HK$’000 HK$’000 1,538 – 522 – 2,060 –	2005 HK$’000 – –
		–

All of the properties held have committed tenants not exceeding approximately three years.

27. CAPITAL COMMITMENT AND CONTINGENT LIABILITIES

Huscoke Group did not have any significant capital commitment and contingent liabilities as at 31 December 2005, 2006 and 2007 respectively.

28. MATERIAL RELATED PARTY TRANSACTIONS

In addition to the transactions and balances detailed elsewhere in this Financial Information, during the period/year, Huscoke Group entered into the following transactions with related parties:

		Nature of		At 31 December
Name of related parties	Relationship	transactions	2007	2006	2005
			HK$’000	HK$’000	HK$’000
金岩電力煤化工有限公司	Company in which	Purchases	98,996	–	13,609
	Mr. Wen Kezhong has
	beneficial interest
Huscoke Shipping Company	Company in which	Freight Commission	1,245	–	–
Limited	Mr. Wen Kezhong has
	beneficial interest

29. POST BALANCE SHEET EVENTS

No significant events took place subsequent to 31 December 2007.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for Huscoke Group in respect of any period subsequent to 31 December 2007.

Yours faithfully

HLB Hodgson Impey Cheng

Chartered Accountants

Certified Public Accountants

Hong Kong

– 116 –

APPENDIX II ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

MANAGEMENT DISCUSSION AND ANALYSIS

For the period commenced from 26 January 2005 (date of incorporation) to 31 December 2005

Financial and business performance

During the period ended 31 December 2005, Huscoke Group recorded a total turnover of approximately HK$14.44 million from sales of coke in the United States of America. The loss for the period was approximately HK$727,000. Save for the sales of coke, the Huscoke Group also recorded the handling fee income which related to coke’s sales of approximately HK$104,000 and the bank interest income of approximately HK$40,000. The major expenses to Huscoke Group were the lease payment for the land of the group and the staff cost of approximately HK$97,000 and approximately HK$66,000 respectively. The Huscoke Group also recorded a depreciation expense of HK$133,000 during the period.

Liquidity and financial resources

As at 31 December 2005, Huscoke Group had net current liabilities of approximately HK$7.7 million. In addition, as at 31 December 2005, the current ratio of Huscoke Group was approximately 36.91%. The gearing ratio (defined as total liabilities over the total assets) of Huscoke Group as at 31 December 2005 was approximately 96.67%.

Charge of assets

During the period under review, Huscoke Group’s leasehold land and buildings having a carrying value of approximately HK$15.97 million have been pledged to secure banking facilities granted to Huscoke Group.

Capital structure

As at 31 December 2005, the issued share capital of Huscoke Group was HK$10,000, comprise of 10,000 issued and fully paid ordinary shares of HK$1.00 each. There were no other loan stocks, preference shares or convertibles issued and outstanding.

Contingent liabilities

As at 31 December 2005, Huscoke Group had no contingent liabilities.

– 117 –

APPENDIX II ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

For the year ended 31 December 2006

Financial and business performance

During the year ended 31 December 2006, Huscoke Group no turnover was recorded from sales of coke in the United States of America during the year. The loss for the year was therefore approximately HK$2,918,000. However, the Huscoke Group recorded the handling fee income which related to coke’s sales of approximately HK$8,000 and the bank interest income of approximately HK$97,000. The major expenses to Huscoke Group were the director remuneration, lease payment for the land of the group and the staff cost of approximately HK$600,000, HK$97,000 and HK$117,000 respectively. The Huscoke Group also recorded a depreciation expense of HK$113,000 during the period.

Liquidity and financial resources

As at 31 December 2006, Huscoke Group had net current liabilities of approximately HK$11.31 million. In addition, as at 31 December 2006, the current ratio of Huscoke Group was approximately 32.38%. The gearing ratio (defined as total liabilities over the total assets) of Huscoke Group as at 31 December 2006 was approximately 85.54%.

Charge of assets

During the year under review, Huscoke Group’s leasehold land and buildings having a carrying value of approximately HK$15.85 million have been pledged to secure banking facilities granted to Huscoke Group.

Capital structure

As at 31 December 2006, the issued share capital of Huscoke Group was HK$10,000, comprise of 10,000 issued and fully paid ordinary shares of HK$1.00 each. There were no other loan stocks, preference shares or convertibles issued and outstanding.

Contingent liabilities

As at 31 December 2006, Huscoke Group had no contingent liabilities.

– 118 –

APPENDIX II

ACCOUNTANTS’ REPORT ON HUSCOKE GROUP

For the year ended 31 December 2007

Financial and business performance

During the period ended 31 December 2007, Huscoke Group recorded a total turnover of approximately HK$116.00 million from sales of coke in the United States of America. The loss for the year was approximately HK$11,999,000. Save for the sales of coke, the Huscoke Group also recorded the handling fee income and freight commission which related to coke’s sales of approximately HK$407,000 and HK$1,245,000 respectively, the bank interest income of approximately HK$97,000. The major expenses to Huscoke Group were the director remuneration, the lease payment for the land of the group and the staff cost of approximately HK$580,000, HK$417,000 and HK$221,000 respectively. The Huscoke Group also recorded a depreciation expense of HK$381,000 during the period.

Liquidity and financial resources

As at 31 December 2007, Huscoke Group had net current liabilities of approximately HK$77.62 million. In addition, as at 31 December 2007, the current ratio of Huscoke Group was approximately 56.58%. The gearing ratio (defined as total liabilities over the total assets) of Huscoke Group as at 31 December 2007 was approximately 93.39%.

Charge of assets

During the period under review, Huscoke Group’s leasehold land, buildings and investment properties having a carrying value of approximately HK$118.98 million have been pledged to secure banking facilities granted to Huscoke Group.

Capital structure

As at 31 December 2007, the issued share capital of Huscoke Group was HK$10,000, comprise of 10,000 issued and fully paid ordinary shares of HK$1.00 each. There were no other loan stocks, preference shares or convertibles issued and outstanding.

Contingent liabilities

As at 31 December 2007, Huscoke Group had no contingent liabilities.

– 119 –

APPENDIX III FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

==> picture [193 x 71] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

20 March 2008

The Board of Directors Frankie Dominion International Limited 1st Floor, Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang HONG KONG

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding the Acquired Plants and Machineries (as defined herein) for each of the three years ended 31 December 2005, 2006 and 2007 (the “Relevant Period II”) prepared on the basis set out in Section 1 below, for inclusion in the circular of Frankie Dominion International Limited (the “Company”) dated 20 March 2008 (the “Circular”) in relation to the acquisition of certain plants and machineries for coal washing, electricity and warming heat supply as well as coal products transportation (the “Acquired Plants and Machineries”), pursuant to a conditional sales and purchase agreement (the “Acquisition Agreement”) entered into between Rich Key Enterprises Limited (the “Purchaser”), a wholly-owned subsidiary of the Company and Mr. Wu Xijian (the “Vendor”) on 11 January 2008 (the “Acquisition”). Particulars of the Acquired Machineries are set out in Section 3 below.

The Financial Information of the Acquired Plants and Machineries has been prepared based on the management accounts of 金岩電力煤化工有限公司 (“金岩電力 ”) , which have adopted 31 December as their financial year end date. 金岩電力 maintained their books and records in accordance with the relevant accounting principles and financial regulations applicable to the PRC enterprises (“PRC GAAP”).

For the purpose of the Acquisition, the directors of 金岩電力 have prepared the Financial Information of the Acquired Plants and Machineries in accordance with accounting policies which are in compliance with HK GAAP (as defined in Section 2 below) for the Relevant Period II. The accounting policies adopted in the preparation of the Financial Information of the Acquired Plants and Machineries are the same as those used in the consolidated financial statements of the Company and its subsidiaries, where applicable.

– 120 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

For the purpose of this report, we have reviewed the Financial Information in accordance with the relevant requirements of Hong Kong Standard on Review Engagements 2400 “Engagements to Review Financial Statements” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Financial Information is free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have agreed the Financial Information to the underlying books and records. In the opinion of the Directors, the Financial Information has been properly compiled and derived from the underlying books and records of the Acquired Plants and Machineries. We have not performed an audit and, accordingly, we do not express an audit opinion.

The Directors of the Company are responsible for the preparation of the Financial Information. It is our responsibility to review the Financial Information and to report our review conclusion to you.

Based on our review, nothing has come to our attention that causes us to believe that the Financial Information is not properly prepared, in all material respects, in accordance with the basis of presentation as set out in Section 1.

1. BASIS OF PRESENTATION

Pursuant to the Acquisition Agreement, the Acquired Plants and Machineries comprised of plant and machineries for the manufacturing of furniture. The Acquired Plants and Machineries are currently owned by 金岩電力 .

The Financial Information of the Acquired Plants and Machineries is prepared based on the management accounts of 金岩電力 on a continuing basis as if the Acquired Plants and Machineries have been under the same ownership with effect from 1 January 2005.

For the purpose of inclusion in the Financial Information, the financial information on the operating results of the Acquired Plants and Machineries has been extracted from the management accounts of 金岩電力 . The Financial Information only includes income and expenses which are directly attributable to the operation of the Acquired Plants and Machineries, such as sales of products and operating costs for the Acquired Plants and Machineries. Indirect income and expenses such as selling expenses, general and administrative expenses, finance costs for working capital and non-operating income and expenses, have not been included. Income tax has not been included as it is calculated and levied on an entity level. The Financial Information of the Acquired Plants and Machineries has been adjusted to comply with the accounting policies as disclosed in Section 2 which are in compliance with HK GAAP.

The Financial Information does not necessarily reflect the results of operations of the Acquired Plants and Machineries that would have been recorded had they been operated under a stand-alone entity during the Relevant Period II because they have historically been operated by 金岩電力 and indirect income and expenses and income tax have not been considered.

– 121 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The Financial Information of the Acquired Plants and Machineries has been prepared in accordance with accounting policies which are in compliance with accounting principles generally accepted in Hong Kong (“HKGAAP”). The Financial Information has been prepared under the historical cost convention.

All material transactions among 金岩電力 in relation to the Acquired Plants and Machineries have been eliminated in preparation of the Financial Information of the Acquired Plants and Machineries.

Plants and Machineries

Plants and Machineries are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is provided to write off the cost of items of plants and machineries over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

An item of plants and machineries is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year/period in which the item is derecognised.

Impairment losses

At each balance sheet date, the carrying amounts of the plant and machineries were reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

– 122 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to 金岩電力 and when the revenue can be measured reliably, from sales of products, when the significant risks and rewards of ownership have been transferred to the buyers, provided that 金岩電力 maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold.

Foreign currencies

The Financial Information of the Acquired Plants and Machineries is stated in Renminbi (“RMB”).

Foreign currency transactions are recorded at the applicable exchange rates ruling at the transaction dates.

On combination, the income statements of those Acquired Plants and Machineries which are denominated in foreign currencies are translated into Renminbi, at the weighted average rates for the year, for inclusion in the Financial Information.

Provisions

Provisions are recognised when a present legal or constructive obligation has arisen as a result of past events, and it is probable that an outflow of resources will be required to settle the obligations, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligations.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Impairment of assets

Impairment tests are carried out annually to determine whether the assets have suffered any impairment. The recoverable amount of an asset or a cash generating unit is determining based on value-in-use calculations which require the use of assumptions and estimates.

– 123 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

(b) Useful lives of plants and machineries

In accordance with HKAS 16, the useful lives of the plants and machineries are estimated in order to determine the amount of depreciation expenses to be recorded. The useful lives are estimated at the time the asset is acquired based on historical experience, the expected usage, wear and tear of the assets, as well as technical obsolescence arising from changes in the market demands or service output of the assets. Annual reviews on whether the assumptions made on useful lives continue to be valid are performed.

3. PARTICULARS OF THE ACQUIRED PLANTS AND MACHINERIES

Particulars of the Acquired Plants and Machineries are as follows:

Particulars of
Acquired Plants	Structure	Area(m2)
電廠主控樓	磚混	2855.50
電廠循環水泵房	磚混	99.40
電廠空壓機房	磚混	143.65
電廠水化車間	磚混	798.85
電廠集中水泵房	磚混	221.00
電廠破碎樓	磚混	546.48
電廠煙囪及煙道	磚混	279.68
電廠配電室	磚混	279.68
電廠脫硫系統	–	–
電廠大門及庫房	–	–
主廠房	–	5959.52
電廠1#棧橋	–	99.40
電廠2#棧橋	–	99.40
電廠架空通廊	–	–
電廠燃燃油泵	–	49.34
電廠水池	–	–
電廠廠區	–	–
電廠空冷氣支架	–	–
電廠化糞池	–	–
電廠除塵及風機支架	–	–
電廠室外	–	–
電廠室外	–	–
公路	–	–
電廠地下管網	–	–
電廠供水管道	–	–
地下溝道	–	–
地面硬化	–	–
機頭房	–	–
濃縮車間	–	820.00

– 124 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of Acquired Plants

Particulars of
Acquired Plants	Structure	Area(m2)
破碎車間	–	–
事故水池	–	–
壓濾車間	–	–
中煤矸石倉	–	–
主廠房	–	5497.92
辦公樓	–	–
階石庫	–	–
洗煤廠油罐基礎	–	–
洗煤維修車間	–	–
洗煤廠石壩	–	–
電子汽車衡	–	–
磅房	–	–
洗煤廠化驗室	–	–
室外工程	–	–
二級公路	–	–
1#轉載站	–	–
301皮帶走廊	–	–
精煤儲寬場卸煤棧橋	–	–
煤泥皮帶走廊	–	–
受煤坑地道	–	–
	–	–
深水井泵房	–	–
室外（硬化等）	–	–
熱源廠主廠房	框架構築物	4109.50
破碎樓	磚混結構	362.88
受煤坑及1#棧橋	框架構築物	60.00
2#棧橋	框架構築物	105.00
熱源廠煙道工程	構築物	226.40
煙�	構築物	128.00
水池及泵房	構築物	373.00
水池泵房及安裝工程	磚混結構	380.00
庫房	磚混結構	381.00
電除塵值班室	磚混結構	229.90
電除塵支架	框架機築物	612.00
圍牆及場地回填	構築物	904.00
消防給水地下管網	–	–
鍋爐基礎工程	–	–
樁基，間窗，屋面	–	–
首站主樓	–	1678.20
首站土方工程	–	–
運輸隊圍牆	–	–
辦公樓	–	3910.95
室外（道路，管道）	–	–
辦公樓	–	6412.94

– 125 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of

Model

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
1#循環流化床鍋爐	TG-7513.82-M7	太原鍋爐集團有限公司	1
2#循環流化床鍋爐	TG-7513.82-M7	太原鍋爐集團有限公司	1
3#循環流化床鍋爐	TG-7513.82-M7	太原鍋爐集團有限公司	1
引風機	GV257 19.5D 960r/min	內蒙古天福風機有限公司	1
引風機	GV257 19.5D 960r/min	內蒙古天福風機有限公司	1
引風機系統	SFYX75-2, 960r/min	瀋陽風機廠有限公司	1
鏈斗式輸渣機	10t/h 3.8KW PS40	太原鍋爐集團中輔英成套設備有限公司	2
	10-30T/h 41.7m
灰渣倉	ZC-300 ¢7000	太原鍋爐集團中輔英成套設備有限公司	1
渣倉頂除塵器	MC-36 0.4-0.6MPa	太原鍋爐集團中輔英成套設備有限公司	1
電動葫蘆	1t	中原起重公司	2
空氣壓縮機	SRC-120SA	上海施耐德日盛壓縮機有限公司	1
減溫減壓裝置	WY80-3.82/450-0.98/305-4/104	江蘇鹽阜電站閥門畏機製造有限公司	1
汽輪機	KC12-3.43/0.98	瀋陽發電設備廠	2
疏水箱	Q235-13 275027002750mm	青島新宇通熱電設備公司	2
給水泵	Dg85-80*7	瀋陽第二水泵廠	4
凝結水泵	4N6	山東雙輪集團陝西銷售有限公司	4
凝結水箱	–	宣興巿東聯水處理設備有限公司	2
空冷風機	DKF54.86-I	山西省定襄縣暖風機廠	12
真空濾油機	TY-6型	重慶巿沙坪壩區高精鋒渝濾油機廠	2
交流潤滑油泵	CH-1810.36	瀋陽第二水泵廠	2
直流潤滑油泵	CH-18	–	2
調速油泵	100YIII20B	瀋陽第二水泵廠	2
高位油箱	–	宜興巿東聯水處理設備有限公司	1
循環泵	250S-D39	山東雙輪集團陝西銷售有限公司	3
射水泵	IS150-125-315	山東對輪集團陝西銷售有限公司	4
機力塔風機	GFNLS3-300	瀋陽巿金巨陽企業有限公司	3
濾水器	DN150 LS150	–	2
電動葫蘆	MD1T-30m	中原起重機械有陽公司	1
電動葫蘆	MD3-30m	中原起重機械有限公司	1
手動單軌小車	WA型1T-5m	中原起重機械有限公司	5
手動單軌小車	WA型2T-5m	中原起重機械有限公司	2
手動單軌小車	WA型5T-5m	中原起重機械有限公司	2
手動單軌小車	WA型5T-8m	中原起重機械有限公司	1
手動單軌小車	WA型1T-9m	中原起重機械有限公司	1
手動單軌小車	WA型5T-9m	中原起重機械有限公司	1
手拉葫蘆	HS型1T-5m	中原起重機械有限公司	5
手拉葫蘆	HS型5T-5m	中原起重機械有限公司	2
手拉葫蘆	HS型5T-8m	中原起重機械有限公司	2
手拉葫蘆	HS型5T-5m	中原起重機械有限公司	2

– 126 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
手拉葫蘆	HS型5T-9m	中原起重機械有限公司	1
手拉葫蘆	HS型1T-9m	中原起重機械有限公司	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS	江蘇華峰電器控制設備廠	1
低壓開關櫃	GCS2200800	江蘇華峰電器控制設備廠	1
低壓開關櫃	–	哈爾濱九洲電氣股份有限公司	1
低壓開關櫃	–	哈爾濱九洲電氣股份有限公司	1
低壓開關櫃	–	哈爾濱九洲電氣股份有限公司	1
微機監控高頻充電機	–	哈爾濱九洲電氣股份有限公司	1
微機監控高頻充電機	–	哈爾濱九洲電氣股份有限公司	1
知能型直流系統絕緣檢測裝置	–	哈爾濱九洲電氣股份有限公司	1
高壓開關櫃	KYN28-12/077	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/079	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/039	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1

– 127 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/043	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/005	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/005	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/014	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/077	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/079	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/039	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/043	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/079	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/039	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/043	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/003	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/005	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/005	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/014	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/077	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/007	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/039	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12/006	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12	華通機電集團有限公司山西分公司	1
高壓開關櫃	KYN28-12	華通機電集團有限公司山西分公司	1
微機消弧消諧櫃	JWSX	安徽巨林電器有限公司	1

– 128 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
微機消弧消諧櫃	JWSX	安徽巨林電器有限公司	1
高壓開關櫃	GSC-40.5	上海上科電氣櫃製造有限公司	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
高壓開關櫃	JYN1-40.5	正泰集團	1
配電箱	–	正泰集團	14
變壓器	S920000/35	太原萬鵬變壓器製造有限公司	1
變壓器	S920000/36	太原萬鵬變壓器製造有限公司	1
變壓器	S9-M-1250/10	–	1
變壓器	S9-M-1250/10	–	1
變壓器	S9-M-1250/10	–	1
變壓器	S9-M-1250/10	–	1
儲電池	FM-500 2V 50	哈爾濱九洲電氣股份有限公司	103
綜合自動化系統	POWER2000	武漢巿星泰電力設備公司	1
低壓熱變	TRS1-185	北京大力浩然工業控制技術有限公司	1
低壓熱變	TRS1-185	–	1
低壓熱變	TRS1-185	–	1
低壓熱變	TRS1-185	–	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
變頻調速櫃	BPT-75/380	北京大力浩然工業控制技術有限公司	1
控制櫃（軟起動力櫃）	XL-21 75	山西華通電氣自動化工程有限公司	1
控制櫃（軟起動力櫃）	XL-21 75	山西華通電氣自動化工程有限公司	1
控制櫃（軟起動力櫃）	XL-21 75	山西華通電氣自動化工程有限公司	1
控制櫃	AOR-132KW	山西華通電氣自動化工程有限公司	1
控制櫃	AOR-132KW	山西華通電氣自動化工程有限公司	1
反滲透一系列	出力40T/h	宜興巿東聯水處理設備公司	2
機械過濾器	¢2800mm水量68m3濾速8-10m3/h	宜興巿東聯水處理設備公司	1
機械過濾器	¢2800mm水量68m3濾速8-10m3/h	宜興巿東聯水處理設備公司	1
活性碳過濾器	¢2800mm水量68m3濾速8-10m3/h	宜興巿東聯水處理設備公司	1

– 129 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of

Model

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
活性碳過濾器	¢2800mm水量68m3濾速8-10m3/h	宜興巿東聯水處理設備公司	1
混合離子交換器	¢2000mm產水量40-100m3/h	宜興巿東聯水處理設備公司	1
混合離子交換器	¢2000mm產水量40-100m3/h	宜興巿東聯水處理設備公司	1
儲氣罐	最高壓力0.5MPa	宜興巿東聯水處理設備公司	1
工業泵	流量100m3/h，揚程40m	–	2
回收泵	轉速1440r/min	山東雙輪集團陝西銷售公司	3
消防泵	轉速1450r/min，揚程68m	山東雙輪集團陝西銷售公司	2
循環泵	轉速2900r/min，流量16m3/n	瀋陽二泵廠	1
加藥系統	450KG	–	2
除鹽水箱	容積150m3	宜興巿東聯水處理設備公司	2
生水箱	容積150m3	宜興巿東聯水處理設備公司	1
濃水箱	容積100m3	宜興巿東聯水處理設備公司	1
儲酸罐	容積10m3	宜興巿東聯水處理設備公司	1
計量箱	V=1.0m	宜興巿東聯水處理設備公司	1
儲�罐	容積10m3	宜興巿東聯水處理設備公司	1
計量箱	V=1.0m	宜興巿東聯水處理設備公司	1
脫氣塔	–	–	2
濾罐	800.00	–	2
自控系統	–	–	1
水化循環動力系統	–	宜興巿東聯水處理設備公司	–
振動給料機	ZG200，電機Y2017-4	新鄉津銳機械廠	3
1號皮帶	寬650mm，周長210米	河北雙龍橡膠公司	1
永久除鐵器	RCYB-6.5	濰坊博思特磁鐵設備公司	1
金屬探測器	JGT-2F	濰坊博思特磁鐵設備公司	1
電磁鐵	RCDB-6.5	濰坊博思特磁鐵設備公司	1
碎煤機	HL4PG-1-100811	四川江油黃龍破碎輸送設備	1
碎煤機	HL4PG-3-100811	–	1
犁煤卸料器	–	新鄉津銳機械廠	10
1#鍋爐電除塵器	MHD60-3/1	湖南湘達環保工程有限公司	1
1#鍋爐脫硫塔除塵器	SPX-75S	湖南湘達環保工程有限公司	1
1-3#鍋爐廂式壓濾機	–	湖南湘達環保工程有限公司	1
2#鍋爐電除塵器	MHD60-3/1	湖南省湯羅巿環保設備製造總公司	1
2#鍋爐脫硫塔除塵器	SPX-75S	湖南省湯羅巿環保設備製造總公司	1
3#鍋爐電除塵器	MHD60-3/1	湖南省湯羅巿環保設備製造總公司	1
3#鍋爐脫硫塔除塵器	SPX-75S	湖南省湯羅巿環保設備製造總公司	1
脫硫除塵泵	150DT-A40	江蘇慶功泵業有限公司	2
清水泵	IS80-65-160	江蘇慶功泵業有限公司	2
加濕攪拌機	SJ30	–	3
加濕攪拌機	SJ20	–	6
電動閘門	DPZ-80	新鄉津銳機械廠	3
三通閘門	700*700	新鄉津銳機械廠	2
拉線開關	–	新鄉津銳機械廠	–
原煤受煤系統	–	–	–
篩分破碎車間	–	–	–
重介系統	–	–	–

– 130 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
濃縮，壓濾系統	–	–	–
產品儲運系統	–	–	–
淨選系統	–	–	–
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
往式給煤機	K4型Q=550t/h	新鄉銳機械廠	1
受煤坑至1號轉載站帶式	B=1200m Lh=215.277m	–	1
輸送機	Q=550t/hα=0º~7º
電子皮帶稱	ICS-XF	山西萬立科技有限公司	1
1號轉載站至篩分破碎	B=1200m Lh=110.307m Q=550t/h	–	1
車間帶式輸送機	α=11.528-191º V=1.6m/s
永磁帶式除鐵器	RCY-C100自動除鐵懸掛高度：	撫順鵬宇機電設備	1
	300-350mm場強＞60mT
原煤分級篩	YA2448型F11.52m2Q=550t/h	新鄉津機械廠	1
	¢70mm沖孔篩板
手選帶式輸送機	B=1000mm L=8.6m, V=0.3m/s,α=0º	–	1
破碎機	SSC700標準型最大入料粒度300mm	唐山森普礦山設備公司	1
	Q=80-120t/h排料粒度＜50mm
帶式輸送機	B=1200mm Lh=14.482m Q=550t/h	–	1
	α=7.995º V=1.6m/s
電子皮帶稱	ICS-XF	山西萬立科技有限公司	1
原入選膠帶輸送機	DT75, B=1200, L=93.574m,	–	1
	v=2.0,α=8-15º
原入選刮板輸送機	XGZZ1200,L=8.92m, v-0.48,α=00	–	1
原煤重介旋流器	3GDMC1400/1000A	山國華科技公司	1
精煤脫介弧形篩	OSB392060,δ=1	森普礦山裝備	1
精煤脫介弧形篩	OSB392060,δ=1	森普礦山裝備	1
精煤脫介弧形篩	OSB392060,δ=1	森普礦山裝備	1
中煤脫介弧形篩	OSB392060,δ=1	森普礦山裝備	1
精煤合格介分流器	SP3-ZII	森普礦山裝備	1
精煤合格介分流器	SP4-ZII	森普礦山裝備	1
精煤合格介分流器	SP5-ZII	森普礦山裝備	1
精煤脫介篩	DMS3642,δl=1,δ2-δ6=0.5,	森普礦山裝備	1
	δ7=13, A≥11
精煤脫介篩	DMS3642,δl=1,δ2-δ6=0.5,	森普礦山裝備	1
	δ7=13, A≥11
精煤脫介篩	DMS3642,δl=1,δ2-δ6=0.5,	森普礦山裝備	1
	δ7=13, A≥11

– 131 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
中煤脫介篩	DMS3642,δl=1,δ2-δ6=0.5,	森普礦山裝備	1
	δ7=13, A≥11
矸石脫介篩	DMS3636,δl=1-δ5=0.5,	森普礦山裝備	1
	δ6=0.3, A≥11
煤泥重介旋流器	SDMC400	山國華科技公司	1
精煤磁選機	DMM914mm x 2972mm	森普礦山裝備	1
精煤磁選機	DMM914mm x 2972mm	森普礦山裝備	1
精煤磁選機	DMM914mm x 2972mm	森普礦山裝備	1
精煤磁選機	DMM914mm x 2972mm	森普礦山裝備	1
中煤磁選機	DMM914mm x 2972mm	森普礦山裝備	1
矸石磁選機	DMM914mm x 2972mm	森普礦山裝備	1
精煤磁選精礦分流器	SP3-SIII	森普礦山裝備	1
精煤磁選精礦分流器	SP3-SIII	森普礦山裝備	1
精煤磁選精礦分流器	SP3-ZIII	森普礦山裝備	1
精煤磁選精礦分流器	SP3-ZIII	森普礦山裝備	1
精煤泥弧形篩	VSB302060,δ=0.4	森普礦山裝備	1
精煤泥弧形篩	VSB302060,δ=0.4	森普礦山裝備	1
精煤泥離心脫水機	LLL1030X550B,δ=0.3	森普礦山裝備	1
精煤泥離心脫水機	LLL1030X550B,δ=0.3	森普礦山裝備	1
末精煤刮板輸送機	XGZ800, L=16.95m, V=0.48,δ=0º	–	1
末精煤離心脫水機	LLL1150X600A,δ=0.5	森普礦山裝備	1
末精煤離心脫水機	LLL1150X600A,δ=0.5	森普礦山裝備	1
末精煤離心脫水機	LLL1150X600A,δ=0.5	森普礦山裝備	1
末精煤離心脫水機	LLL1150X600A,δ=0.5	森普礦山裝備	1
臥式沉降過濾離心脫水機	LWZ1400X2000	森普礦山裝備	1
粉矸石弧形篩	VSB242060,δ=0.4	森普礦山裝備	1
原煤合格介質泵	350ZJ-I-F100(89), n=590rpm, DC傳動	石家壓工業泵廠	1
煤泥合板介質泵	100ZJ-I-A50, n=850rpm, CR傳動	石家壓工業泵廠	1
精煤泥泵	300ZJD-A60, n=590rpm, CR傳動	石家庄工業泵廠	1
中煤泥泵	200ZJD-B45, n=700rpm, CL傳動	石家庄工業泵廠	1
矸石磁尾泵	100ZJD-B40, n=980rpm, CL傳動	石家庄工業泵廠	1
浮選入料泵	300ZJD-A60, n=590rpm, CL傳動	石家庄工業泵廠	1
精煤離心液泵	50ZJD-B40, n=980rpm, CL傳動	石家庄工業泵廠	1
加介起重電磁鐵	MW5-110L/1	鵬宇機電設備	1
雙樑橋式起重機	20/5t,跨度22.5m,含電動葫蘆,	中原起重機械	1
	H=25米總功率N=59.6kW
主廠房掃地泵	80ZJL-A36, n=970rpm, DC傳動	石家庄工業泵廠	1
重介密度自動監控系統	DMAC-11 SΔ=±@0.01kg/L	山國華科技公司	1
一段斜管濃縮機	ITT(AI)25	唐山森普礦山設備裝備有限公司	1
一段斜管濃縮機	ITT(AI)25	唐山森普礦山設備裝備有限公司	1
一段斜管濃縮機	ITT(AI)25	唐山森普礦山設備裝備有限公司	1
一段斜管濃縮機	ITT(AI)25	唐山森普礦山設備裝備有限公司	1
一段斜管濃縮機底流泵	50ZJ-I-A33, n=980rm, DC傳動	石家庄工業泵廠	1
一段斜管濃縮機底流泵	50ZJ-I-A33, n=980rm, DC傳動	石家庄工業泵廠	1
一段斜管濃縮機底流泵	50ZJ-I-A33, n=980rm, DC傳動	石家庄工業泵廠	1

– 132 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
一段斜管濃縮機底流泵	50ZJ-I-A33, n=980rpm, DC傳動	石家莊工業泵廠	1
二段斜管濃縮機	ITT(C) 100	唐山森普礦山設備裝備有限公司	1
二段斜管濃縮機	ITT(C) 100	唐山森普礦山設備裝備有限公司	1
尾煤壓濾機入料泵	FP100, n=1400rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1
循環水泵	300ZJD-A60, n=730rpm, DC傳動,	石家莊工業泵廠	1
	機械密封
濃縮車間掃地泵	50ZJD-A60, n=730rpm,	石家莊工業泵廠	1
	DC傳動，機械密封，
尾煤壓濾機	XMG500/1600-U	衡水海江壓濾機有限公司	1
尾煤壓濾機	XMG500/1600-U	衡水海江壓濾機有限公司	1
尾煤泥刮板輸送機	XGZ800, L=14, 410m, v=0.48,α=30	–	1
尾煤泥膠帶輸送機	XGZ800, L=14, 410m, v=0.48,α=30	–	1
壓濾車間掃地泵	502ZJL-A20,n=1440rpm. DC傳動	–	1
絮凝劑攪拌桶	XBT-20	唐山森普礦山設備裝備有限公司	1
渣漿泵	50ZJ-I-A33	河北�源泵業有限公司	2
渣漿泵	80ZJI-I-A36	河北�源泵業有限公司	1
渣漿泵	3000JD-A60	河北�源泵業有限公司	1
渣漿泵	100IJD-A50	河北�源泵業有限公司	1
–	YA2448	新鄉巿津銳機械廠	1
精煤出廠膠帶輸送機	TD75, B=1000, L=45.906m,	–	1
	v=1.6,α=1.02º
中煤出廠膠帶輸送機	TD75, B=800, L=109.711m,	–	1
	v=1.6,α=0-18º
矸石出廠膠帶輸送機	TD75, B=800, L=101.711m,	–	1
	v=1.6,α=0-18º
主廠房至精煤儲煤場帶式輸送機	B=1200mm, Lh=126.647m, Q=400t/h	–	1
精煤儲煤場帶式輸送機	B=1200mm, Lh=135.6m, Q=400t/h	–	1
中煤倉至中煤卸載站帶式輸送機	B=800mm, Lh=50.3m, Q=155t/h,	–	1
	α=0, V=1.6m/s, Y160M-4, N=11kW
噴射式浮選機	FJC20-6	唐山國華科技有限公司	1
精煤壓濾機	XMGZ350/1600-X/U	衡水海江壓濾機有限公司	1
精煤壓濾機	XMGZ350/1600-X/U	衡水海江壓濾機有限公司	1
精煤壓濾機	XMGZ350/1600-X/U	衡水海江壓濾機有限公司	1
精煤壓濾機	XMGZ350/1600-X/U	衡水海江壓濾機有限公司	1
精煤壓濾機	XMGZ350/1600-X/U	衡水海江壓濾機有限公司	1
浮選精煤刮板輸送機	XGZ800, L=9.970m, v=0.48,α=30	忻州新元煤焦設備公司	1
浮選精煤刮板輸送機	XGZ800, L=9.970m, v=0.48,α=30	忻州新元煤焦設備公司	1
浮選精煤刮板輸送機	XGZ800, L=9.970m, v=0.48,α=30	忻州新元煤焦設備公司	1
浮選精煤刮板輸送機	XGZ800, L=9.970m, v=0.48,α=30	忻州新元煤焦設備公司	1
浮選精煤刮板輸送機	XGZ800, L=9.970m, v=0.48,α=30	忻州新元煤焦設備公司	1
精煤壓濾機入料泵	FP100, n=1250rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1
精煤壓濾機入料泵	FP100, n=1250rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1
精煤壓濾機入料泵	FP100, n=1250rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1

– 133 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
精煤壓濾機入料泵	FP100, n=1250rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1
精煤壓濾機入料泵	FP100, n=1250rpm, ZV,機械密封	唐山巿科匯流體機械開發公司	1
空氣壓縮機	SA-55, Q=10.4m3/min, P=0.75Mpa	太原巿寶通利機械有限公司	1
儲氣罐	Φ1800, V=10m3	太原巿寶通利機械有限公司	1
浮選預處理器	PF-3500	唐山國華科技有限公司	1
主廠房高壓櫃	–	–	–
自動化控制系統	–	陝西奧托科技發展公司	1
深井	–	介休巿水利機械鑿井隊	–
常林裝載機	ZLM50E-5	江蘇常林機械有限公司	4
推煤機	T160B	鞍山巿礦山機械廠	2
自卸車	ZS5820PD	宜常陸聖汽車有限公司	2
自卸車	10T	東風汔車有限公司	1
油浸變壓器	S9-1600KVA	長城電器集團山西銷售公司	1
乾式變壓器	SGB-1250KVA	長城電器集團山西銷售公司	1
乾式變壓器	SGB-1250KVA	長城電器集團山西銷售公司	1
補水泵變頻恆壓智能控制櫃	75KW	考義巿民揚電器門巿部	1
補水泵變頻恆壓智能控制櫃	75KW	考義巿民揚電器門巿部	1
智能配電櫃	GGD630A	考義巿民揚電器門巿部	1
高壓開關櫃	VSI-2000/31.5KA	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH2-1AH8 1AH11	山西華通電氣自動化工程有限公司	1
消弧消諧及小電流智能櫃	KYN28-1AH9	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-1AH10	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-12	山西華通電氣自動化工程有限公司	1
高壓開關櫃	KYN28-12	山西華通電氣自動化工程有限公司	1
鍋爐動力配電箱	ILDX-XL-15	山西華通電氣自動化工程有限公司	1
軸流風機	MSBB9	山西華通電氣自動化工程有限公司	6
排水泵	JXF-3004	山西華通電氣自動化工程有限公司	2
–	MZS-MP1	山西華通電氣自動化工程有限公司	1
–	MZS-MP2	山西華通電氣自動化工程有限公司	1
–	MZS-MP3	山西華通電氣自動化工程有限公司	1
–	MZS-MP4	山西華通電氣自動化工程有限公司	1
–	MZS-MP5	山西華通電氣自動化工程有限公司	1
–	GMDX1	山西華通電氣自動化工程有限公司	1
–	GMDX2	山西華通電氣自動化工程有限公司	1
–	HH4-30/3	山西華通電氣自動化工程有限公司	4

– 134 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
–	JXF3008	山西華通電氣自動化工程有限公司	1
–	JXF3008	山西華通電氣自動化工程有限公司	1
–	JXF3008	山西華通電氣自動化工程有限公司	1
–	JXF3008	山西華通電氣自動化工程有限公司	1
–	MZS-1AA1	山西華通電氣自動化工程有限公司	1
–	MZS-1AA2	山西華通電氣自動化工程有限公司	1
–	MZS-1AA3	山西華通電氣自動化工程有限公司	1
–	MZS-1AA4	山西華通電氣自動化工程有限公司	1
–	MZS-1AA5	山西華通電氣自動化工程有限公司	1
–	MZS-2AA1	山西華通電氣自動化工程有限公司	1
–	MZS-2AA2	山西華通電氣自動化工程有限公司	1
–	MZS-2AA3	山西華通電氣自動化工程有限公司	1
–	MZS-2AA4	山西華通電氣自動化工程有限公司	1
–	MZS-2AA5	山西華通電氣自動化工程有限公司	1
1#皮帶控制箱	JXF3006	山西華通電氣自動化工程有限公司	1
2#皮帶控制箱	55KW	山西華通電氣自動化工程有限公司	1
3#皮帶控制箱	55KW	山西華通電氣自動化工程有限公司	1
3#皮帶控制箱	55KW	山西華通電氣自動化工程有限公司	1
破碎機啟動櫃	2*90KW	山西華通電氣自動化工程有限公司	1
給料機控制箱	JXF3004	山西華通電氣自動化工程有限公司	1
警鈴	SCF-8 AC220V	山西華通電氣自動化工程有限公司	12
–	MZS-1AA1	山西華通電氣自動化工程有限公司	1
–	MZS-1AA2	山西華通電氣自動化工程有限公司	1
–	MZS-1AA3	山西華通電氣自動化工程有限公司	1
–	MZS-1AA4	山西華通電氣自動化工程有限公司	1
–	MZS-1AA5	山西華通電氣自動化工程有限公司	1
–	MZS-1AA6	山西華通電氣自動化工程有限公司	1
–	MZS-1AA7	山西華通電氣自動化工程有限公司	1
–	MZS-1AA8	山西華通電氣自動化工程有限公司	1
–	MZS-1AA9	山西華通電氣自動化工程有限公司	1
直流屏	600AH	上海�力源設備有限公司	1
事故櫃	–	上海�力源設備有限公司	1
內反饋斬波調速裝置	SN61	上海南征電子電氣成套公司	1
內反饋斬波調速裝置	SN61	上海南征電子電氣成套公司	1
內反饋斬波調速裝置	SN61	上海南征電子電氣成套公司	1
內反饋斬波調速裝置	–	上海南征電子電氣成套公司	1
內反饋斬波調速裝置	–	上海南征電子電氣成套公司	1
靜電除塵器	YDC132-3	江蘇宇達電站輔機閥門製造公司	1
靜電除塵器	單室四電場135m2	湖南湘達還保工程有限公司	1
鍋爐主機	QXF116-161130170P	泰山集團股份有限公司	1
鍋爐保溫	–	鄭州巿玉洲耐火材料有限公司	–
鍋爐防磨防腐	–	咸陽旭輝電力設備有限公司	–
鍋爐調試	–	太原特比特電力工程科技有限公司	–

– 135 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
鍋爐耐火材料	–	鄭州巿玉洲耐火材料有限公司	–
鍋爐照明	–	高郵巿華明電器廠	–
鍋爐引風管道系統	–	江蘇環球波紋管製造有限公司	–
一次風機	QALG-2No19.4D	鞍山巿風機二廠	1
二次風機	QAG-6No15.5D	鞍山巿風機二廠	1
引風機	QAY-1BNo24D	鞍山市風機二廠	1
組合式齒輥破碎機	DZ4PG200-Y	新鄉市汞振機械製造有限公司	1
循環泵	DFSS400-680A	上海東方泵業（集團）有限公司	2
定壓泵	IS125-100-250A	上海東方泵業（集團）有限公司	2
電機振動給料機	2G	忻州市新元煤焦設備有限公司	2
補水泵	KQW40/185-3/2	上海凱泉泵業（集團）有限公司	1
刮板給煤機	MGG-20	石家莊市偉東機械實業有限公司	4
振動給料機	TGZ-80-120	石家莊市偉東機械實業有限公司	2
除渣機	XS	石家莊市偉東機械實業有限公司	1
集散控制系統	DCS	浙江中控技術有限公司	1
監控系統	–	武漢市星泰電力設備有限公司	–
電子皮帶秤	ICS_XF	山西萬立科技有限公司	1
永磁帶式除鐵器	RCY-C80	撫順凱宇機電設備有限公司	1
配電水箱	–	山西天健環境工程有限公司	24
鼓風機	JAS-200	長沙鼓風機廠山西銷售部	1
電纜	–	長沙鼓風機廠山西銷售部	–
熱工系統	–	山西萬立科技有限公司	–
靜電除塵器	–	湖南湘達環保工程有限公司	2
凝結水回收機	–	–	2
清水泵	–	–	2
軟水器	–	–	1
除氧器	–	–	1
補水泵	–	–	2
二網補水泵	–	–	1
臥式循環泵	–	–	2
50T水箱	–	–	1
手拉行車	5T	–	1
電器部分	–	–	–
管道部分	–	–	–
汽水換熱器	–	–	2
板式換熱器	–	–	1
手拉行車	10T	–	2
電器部分	–	–	–
管道部分	–	–	–
自動控制柜	–	–	1
無線通信系統	–	–	–
辦公桌	–	–	1
電腦	聯想LXM-WL19AS	–	1

– 136 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Particulars of	Model
the Acquired Machineries	Number	Manufacturer	Quantity
手機	–	–	30
空壓機	W-0.9/12.5-A	–	1
空壓機	V-165110	–	1
發電機	STC-20	–	1
電焊機	BX1-315	–	1
電焊機	BX1-315	–	1
電焊機	BX1-315	–	1
油罐	20T	–	1
油罐	20T	–	1
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
重型半掛牽引車	–	–	–
慶鈴皮卡車	–	–	–
雙排座	–	–	–
福田輕卡	–	–	–
北方奔馳大型運輸	–	–	–
三輪車	–	–	–

– 137 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

4. COMBINED RESULTS

The following is a summary of the combined results of the Acquired Plants and Machineries for the Relevant Period II, which have been prepared on the basis set out in Section 1.

Revenue Costs of goods sold Gross profit Other expenses Profit before tax	Year ended 31 December 2007 2006 2005 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 214,985 21,600 19,597 (182,393) (15,660) (14,661) 32,592 5,940 4,936 (3,433) (144) (130) 29,159 5,796 4,806

a. Segment information

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

The businesses of the Acquired Plants and Machineries are structured and managed separately, according to the nature of their operations and the products they produce. Each of the business segments represents a strategic business unit that offers products which are subject to risks and returns that are different from those of the other business segments. The business segments of the Acquired Plants and Machineries are categorised as follows:

(a) Coal washing;
(b) Electricity supply;
(c) Warming heat supply; and
(d) Coal products transportation services.

In determining the geographical segments of the Acquired Machineries, revenues and results are attributed to the segments based on the location of the customers, i.e. sales in the PRC.

– 138 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Business segments

The following table presents revenue and results information for the Acquired Machineries’ business segments.

Year ended 31 December 2005

Revenue Segment results Other expenses Profit before tax	Coal washing RMB’000 (Unaudited) – –	Electricity supply RMB’000 (Unaudited) – –	Warm Coal products heating transportation supply services RMB’000 RMB’000 (Unaudited) (Unaudited) – 19,597 – 4,936	Total RMB’000 (Unaudited) 19,597 4,936 (130) 4,806

Year ended 31 December 2006

Revenue Segment results Other expenses Profit before tax	Coal washing RMB’000 (Unaudited) – –	Electricity supply RMB’000 (Unaudited) – –	Warm Coal products heating transportation supply services RMB’000 RMB’000 (Unaudited) (Unaudited) – 21,600 – 5,940	Total RMB’000 (Unaudited) 21,600 5,940 (144) 5,796

– 139 –

APPENDIX III

FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

Year ended 31 December 2007

Revenue Segment results Other expenses Profit before tax	Coal washing RMB’000 (Unaudited) 165,750 15,810	Electricity supply RMB’000 (Unaudited) 22,989 9,196	Warm Coal products heating transportation supply services RMB’000 RMB’000 (Unaudited) (Unaudited) 4,646 21,600 1,646 5,940	Total RMB’000 (Unaudited) 214,985

				32,592 (3,433
				29,159

Geographical segments

As at 31 December 2005, 2006 and 2007, the whole amounts of the Acquired Plants and Machineries are located at the PRC and no geographical segments were presented accordingly.

b. Revenue and other revenue

Revenue represents gross revenue arising from sales of products. It is stated net of value added tax of approximately RMB19,597,000, RMB21,600,000 and RMB214,985,000 respectively for the years ended 31 December 2005, 2006, 2007. Value added tax is accrued at 9.5% of the gross sales revenue from sales of products to customers.

An analysis of revenue is as follows:

Coal washing Electricity supply Warm heating supply Coal products transportation services	Year ended 31 December 2007 2006 2005 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 165,750 – – 22,989 – – 4,646 – – 21,600 21,600 19,597 214,985 21,600 19,597	Year ended 31 December 2007 2006 2005 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 165,750 – – 22,989 – – 4,646 – – 21,600 21,600 19,597 214,985 21,600 19,597
		19,597

– 140 –

APPENDIX III FINANCIAL INFORMATION ON THE ACQUIRED PLANTS AND MACHINERIES

c. Profit before tax

The Acquired Plant and Machineries’ profit before tax is arrived at after charging:

Cost of goods sold – Raw materials – Electricity – Direct labour – Factory overhead Other expenses – Staff costs – Maintenance costs – Depreciation – Others tax – Other	Year ended 31 December 2007 2006 2005 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 143,034 4,730 3,913 750 25 20 8,989 5,758 5,618 29,620 5,148 5,110 182,393 15,661 14,661 227 – – 313 – – 70 – – 2,620 144 130 203 – – 3,433 144 130	Year ended 31 December 2007 2006 2005 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) 143,034 4,730 3,913 750 25 20 8,989 5,758 5,618 29,620 5,148 5,110 182,393 15,661 14,661 227 – – 313 – – 70 – – 2,620 144 130 203 – – 3,433 144 130
		14,661
		– – – 130 –
		130

The valuation of the Acquired Plants and Machineries as at 31 December 2007 is RMB420,700,000, which is based on the valuation report issued by B.I. Appraisals Limited, an independent property valuers.

Yours faithfully,

HLB Hodgson Impey Cheng

Chartered Accountants Certified Public Accountants Hong Kong

– 141 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

==> picture [193 x 71] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

20 March 2008

The Directors Frankie Dominion International Limited 1st Floor, Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang HONG KONG

Dear Sirs,

We report on the unaudited pro forma financial information of Frankie Dominion International Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) and Pride Eagle Investments Limited (“Pride Eagle”) and its subsidiaries (collectively referred to as the “Pride Eagle Group”) (together with the Group hereinafter referred to as the “Enlarged Group I”) (the “Unaudited Pro Forma Financial Information”) which has been prepared by the directors of the Company for illustrative purpose only, to provide information about how the proposed acquisition of Pride Eagle Group (the “First Acquisition”), might have affected the financial information presented for inclusion in Appendix I of the circular of the Company dated 20 March 2008 (the “Circular”). The basis of preparation for the Unaudited Pro Forma Financial Information on the Enlarged Group I is set out on page 144 to the Circular.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND REPORTING ACCOUNTANTS

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information on the Enlarged Group I in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion as required by Rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information on the Enlarged Group I and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information on the Enlarged Group I beyond that owned to those to whom those reports were addressed by us at the dates of their issue.

– 142 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

BASIS OF OPINION

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements (“HKSIR”) 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information on the Enlarged Group I with the directors of the Company. The engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information on the Enlarged Group I has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group I as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information on the Enlarged Group I is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Enlarged Group I as at 31 December 2006 or any future date; or
the financial results and cash flows of the Enlarged Group I for the year ended 31 December 2006 or for any future period.

OPINION

In our opinion:

the Unaudited Pro Forma Financial Information on the Enlarged Group I has been properly compiled by the directors of the Company on the basis stated;
such basis is consistent with the accounting policies of the Group; and
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group I as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithfully

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

– 143 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

1. Introduction

The Unaudited Pro Forma Financial Information on the Enlarged Group I has been prepared to illustrate the effect of the First Acquisition.

The Unaudited Pro Forma Financial Information on the Enlarged Group I has been prepared in accordance with the Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the First Acquisition as if the First Acquisition took place on 31 December 2006 for the consolidated balance sheet and on 1 January 2006 for the consolidated income statement and consolidated cash flow statement.

The unaudited pro forma consolidated balance sheet, unaudited pro forma consolidated income statement and unaudited pro forma cash flow statement of the Enlarged Group I is prepared based on the audited consolidated balance sheet of the Group as at 31 December 2006, the audited consolidated income statement and audited consolidated cash flow statement of the Group for the year ended 31 December 2006 as set out in Appendix I to the Circular, the audited balance sheet of Huscoke International Group Limited, the sole subsidiary of Pride Eagle, (“Huscoke”) and its subsidiary (collectively referred to as the “Huscoke Group”) as at 31 December 2007, the audited consolidated income statement and audited consolidated cash flow statement of Huscoke Group for the year ended 31 December 2007 as set out in Appendix II to the Circular, after making pro forma adjustments relating to the First Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

The financial information of Pride Eagle is not presented in the Unaudited Pro Forma Financial information because the directors of the Company consider that the financial information of Pride Eagle is not material to the Unaudited Pro Forma Financial Information of the Enlarged Group I.

The accompanying Unaudited Pro Forma Financial Information on the Enlarged Group I has been prepared by the directors of the Company for illustrative purpose only and is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Financial Information on the Enlarged Group I does not purport to describe the actual financial position of the Enlarged Group I that would have been attained has the First Acquisition been completed on 31 December 2006 and to describe the actual financial results and cash flows of the Enlarged Group I that would have been attained has the First Acquisition been completed on 1 January 2006, nor purport to predict the Enlarged Group I’s future financial position or results of operations.

– 144 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

The Unaudited Pro Forma Financial Information on the Enlarged Group I should be read in conjunction with the Accountants’ Report on the Huscoke Group as set out in Appendix II, the historical financial information on the Group as set out in Appendix I and other financial information included elsewhere in the Circular.

The Unaudited Pro Forma Financial Information on the Enlarged Group I has been prepared by the directors of the Company for illustrative purposes only and because of its nature, it may not give a true picture of financial position of the Enlarged Group I following completion of the First Acquisition.

– 145 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

(I) Unaudited Pro Forma Consolidated Balance Sheet of the Enlarged Group I

The following is the unaudited pro forma consolidated balance sheet of the Enlarged Group I, assuming that First Acquisition has been completed on 31 December 2006. The information is based on the audited consolidated financial statements of the Group as at 31 December 2006 and the audited financial information of Huscoke Group as at 31 December 2007 as set out in Appendices I and II to the Circular respectively. Such information is adjusted to reflect the effect of First Acquisition.

As the unaudited pro forma consolidated balance sheet of the Enlarged Group I has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Enlarged Group I as at the date to which it is made up to or at any future date.

Audited
Audited
Consolidated
Consolidated
Balance
Balance
Sheet of
Sheet of the
Huscoke
Group as at
Group as at
31 December
31 December
2006
2007
HK$’000
HK$’000
ASSETS
Non-current assets
Investment properties
–
57,300
Property, plant and equipment
114,945
11,602
Prepaid lease payments
22,019
50,845
Interests in associate
315
–
Goodwill
–
–
Available-for-sale investment
880
–
138,159
119,747
Current assets
Inventories
67,563
–
Debtors, bills receivable
and prepayments
92,810
18,826
Payment in advance
–
78,000
Prepaid lease payments
627
417
Investments held for trading
8,630
–
Tax recoverable
1,949
–
Short term bank deposits
39,505
–
Short term pledged bank deposits
2,840
–
Bank balances and cash
41,919
3,882
255,843
101,125
Total assets
394,002
220,872

Unaudited
Pro Forma
Consolidated
Balance
Sheet of the
Enlarged
Group I as at
Pro Forma
31 December
Sub-total
adjustments
2006
HK$’000
HK$’000
Notes
HK$’000
57,300
57,300
126,547
4,519
2
131,066
72,864
18,755
2
91,619
315
315
–
1,192,210
3
1,192,210
880
880
257,906
1,473,390
67,563
67,563
111,636
111,636
78,000
78,000
1,044
150
2
1,194
8,630
8,630
1,949
1,949
39,505
39,505
2,840
2,840
45,801
(100,000)
1(a)
(54,199)
356,968
257,118
614,874
1,730,508

– 146 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

Audited
Audited
Consolidated
Consolidated
Balance
Balance
Sheet of
Sheet of the
Huscoke
Group as at
Group as at
31 December
31 December
2006
2007
HK$’000
HK$’000
EQUITY
Capital and reserves
Share capital
47,793
10
Reserves/(Accumulated loss)
174,449
(15,644)
Total equity
222,242
(15,634)
LIABILITIES
Current liabilities
Creditor, bills payable
and accrued charges
96,751
3,909
Receipt in advance
–
156,000
Amount due to a director
–
11,107
Amount due to a related company
–
271
Amount due to an associate
294
–
Bank borrowings
70,029
6,383
Tax payable
–
1,075
167,074
178,745
Non-current liabilities
Convertible bonds
–
–
Bank borrowings
–
56,034
Deferred taxation
4,686
1,727
4,686
57,761
Total liabilities
171,760
236,506
Total equity and liabilities
394,002
220,872
Net current assets/(liabilities)
88,769
(77,620)
Total assets less current liabilities
226,928
42,127

Unaudited
Pro Forma
Consolidated
Balance
Sheet of the
Enlarged
Group I as at
Pro Forma
31 December
Sub-total
adjustments
2006
HK$’000
HK$’000
Notes
HK$’000
47,803
(10)
5
47,793
158,805
236,954
6
395,759
206,608
443,552
100,660
11,378
4
112,038
156,000
156,000
11,107
(11,107)
4
–
271
(271)
4
–
294
294
76,412
76,412
1,075
1,075
345,819
345,819
–
831,746
7
831,746
56,034
56,034
6,413
46,944
8
53,357
62,447
941,137
408,266
1,286,956
614,874
1,730,508
11,149
(88,701)
269,055
1,384,689

– 147 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

(II) Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group I

The following is the unaudited pro forma consolidated income statement of the Enlarged Group I, assuming that the First Acquisition has been completed on 1 January 2006. The information is based on the audited consolidated financial statements of the Group for the year ended 31 December 2006 and the audited financial information of Huscoke Group for the year ended 31 December 2007 as set out in Appendices I and II to the Circular respectively. Such information is adjusted to reflect the effect of the First Acquisition.

As the unaudited pro forma consolidated income statement of the Enlarged Group I has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the results of the Enlarged Group I for the year ended to which it is made up to or for any future period.

Audited
Audited
Consolidated
Consolidated
Income
Income
Statement of
Statement of
Huscoke
the Group for
Group for
the year ended the year ended
31 December
31 December
2006
2007
HK$’000
HK$’000
Revenue
714,731
116,003
Cost of sales
(645,465)
(98,996)
Gross profit
69,266
17,007
Other revenue
–
1,749
Other income
9,432
–
Distribution costs
(24,637)
(3,464)
Administrative expenses
(60,641)
(4,948)
Gain on disposal of an associate
66
–
Change in fair value of
investment properties
–
10,031
Change in fair value of
investment held for trading
(117)
–
Discount on acquisition
of additional interests
in a subsidiary
28,222
–
Impairment loss in respect of
amount due from the immediate
holding company
–
(28,590)
Finance costs
(5,793)
(982)
Share of profits of associates
261
–
Guarantee net profit
–
–
Profit/(loss) before taxation
16,059
(9,197)
Taxation
914
(2,802)
Profit/(loss) for the year
16,973
(11,999)

Unaudited
Pro Forma
Consolidated
Income
Statement of
the Enlarged
Group I for
the year ended
Pro Forma
31 December
Sub-total
adjustments
2006
HK$’000
HK$’000
Notes
HK$’000
830,734
830,734
(744,461)
(744,461)
86,273
86,273
1,749
1,749
9,432
9,432
(28,101)
(28,101)
(65,589)
(1,054)
9
(66,643)
66
66
10,031
10,031
(117)
(117)
28,222
28,222
(28,590)
(28,590)
(6,775)
(47,825)
10
(54,600)
261
261
–
100,000
11
100,000
6,862
57,983
(1,888)
8,369
12
6,481
4,974
64,464

– 148 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

Audited Audited Consolidated Consolidated Income Income Statement of Statement of Huscoke the Group for Group for the year ended the year ended 31 December 31 December 2006 2007 HK$’000 HK$’000 Attributable to: Equity holders of the Company 18,912 (11,999) Minority interests (1,939) – 16,973 (11,999) Earnings/(loss) per share contributable to the equity holders of the Company – Basic and diluted 3.96 cents (119,990) cents		Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group I for the year ended Pro Forma 31 December Sub-total adjustments 2006 HK$’000 HK$’000 Notes HK$’000 6,913 66,403 (1,939) (1,939) 4,974 64,464 13 13.89 cents

– 149 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

(III) Unaudited Pro Forma Consolidated Cash Flow Statement of the Enlarged Group I

The following is the unaudited pro forma consolidated cash flow statement of the Enlarged Group I, assuming that the First Acquisition has been completed on 1 January 2006. The information is based on the audited consolidated financial statements of the Group for the year ended 31 December 2006, the audited financial statements of Huscoke Group for the year ended 31 December 2007 as set out in Appendices I and II to the Circular respectively. Such information is adjusted to reflect the effect of the First Acquisition.

As the unaudited pro forma consolidated cash flow statement of the Enlarged Group I has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the cash flows of the Enlarged Group I for the year ended to which it is made up to or for any future period.

						Unaudited
		Audited				Pro Forma
	Audited	Consolidated				Consolidated
	Consolidated	Cash Flow				Cash Flow
	Cash Flow	Statement of				Statement of
	Statement of	Huscoke				the Enlarged
	the Group for	Group for				Group I for
	the year ended	the year ended				the year ended
	31 December	31 December		Pro Forma		31 December
	2006	2007	Sub-total	adjustments		2006
	HK$’000	HK$’000	HK$’000	HK$’000	Notes	HK$’000
Cash flow from operating activities
Profit/(loss) before taxation	16,059	(9,197)	6,862	51,121	14	57,983
Adjustments for:
Share of profits of associates	(261)	–	(261)			(261)
Release of prepaid lease payments	622	417	1,039			1,039
Depreciation of property,
plant and equipment	17,897	381	18,278	1,054	9	19,332
Impairment loss in respect of
amount due from the immediate
holding company	–	28,590	28,590			28,590
Change in fair value of
investment properties	–	(10,031)	(10,031)			(10,031)
Gain on disposal of an associate	(66)	–	(66)			(66)
Gain on disposal of property,
plant and equipment	(318)	–	(318)			(318)
Discount on acquisition of
additional interest in
a subsidiary	(28,222)	–	(28,222)			(28,222)
Allowances for bad and
doubtful debts	2,304	–	2,304			2,304
Interest expenses	5,793	982	6,775	47,825	10	54,600
Change in fair value of
investments held for trading	117	–	117			117
Interest income	(2,387)	(97)	(2,484)			(2,484)

– 150 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

Audited
Audited
Consolidated
Consolidated
Cash Flow
Cash Flow
Statement of
Statement of
Huscoke
the Group for
Group for
the year ended the year ended
31 December
31 December
2006
2007
HK$’000
HK$’000
Operating cash flows before
movement in working capital
11,538
11,045
Increase in inventories
(586)
–
Increase in debtors, bill receivables
and prepayments
(5,905)
(18,785)
Increase in payment in advance
–
(78,000)
Increase in amount due from
immediate holding company
–
(28,590)
Increase in amount due from a director
–
1,771
Decrease in amount due
from related company
–
65
Increase in creditors, bills payable
and accrued charges
4,695
3,559
Increase in receipts in advance
–
156,000
Decrease in amount due to a director
–
(60)
Decrease in amount due to immediate
holding company
–
(1,213)
Increase in amount due to
a related company
–
271
Cash generated from operations
9,742
46,063
Bank overdraft interest
–
(294)
Hong Kong profits tax refund
1
–
Net cash generated from
operating activities
9,743
45,769
Cash flow from investing activities
Decrease in bank deposits
15,600
–
Purchase of investments held for trading
(5,733)
–
Purchase of investment properties
–
(47,269)
Purchase of property,
plant and equipment
(9,346)
(8,093)
Acquisition of additional
interest in a subsidiary
(11,250)
–
Acquisition of a subsidiary
–
–
Increase in prepaid lease payments
–
(39,383)
Increase in pledged bank deposits
(99)
–
Proceeds from disposal of an associate
533
–
Proceeds from disposal of
investments held for trading
124
–
Proceeds from disposals of
property, plant and equipment
6,160
–
Disposal of a subsidiary
1,923
–
Interest received
2,387
97

Unaudited
Pro Forma
Consolidated
Cash Flow
Statement of
the Enlarged
Group I for
the year ended
Pro Forma
31 December
Sub-total
adjustments
2006
HK$’000
HK$’000
Notes
HK$’000
22,583
122,583
(586)
(586)
(24,690)
(26,754)
4
(51,444)
(78,000)
(78,000)
(28,590)
28,590
4
–
1,771
(1,711)
4
–
65
(65)
4
–
8,254
(1,002)
4
7,252
156,000
156,000
(60)
60
4
–
(1,213)
1,213
4
–
271
(271)
4
–
55,805
155,805
(294)
(294)
1
1
55,512
155,512
15,600
15,600
(5,733)
(5,733)
(47,269)
(47,269)
(17,439)
(17,439)
(11,250)
(11,250)
–
(100,000)
1(a)
(100,000)
(39,383)
(39,383)
(99)
(99)
533
533
124
124
6,160
6,160
1,923
1,923
2,484
2,484

– 151 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

– 152 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

(IV) Notes to The Unaudited Pro Forma Financial Information

Under HKFRS 3 Business Combinations (“HKFRS 3”), the Group will apply the purchase method to account for First Acquisition. In applying the purchase method, the identifiable assets, liabilities and contingent liabilities of Pride Eagle Group will be recorded on the consolidated balance sheet of the Group at their fair values at the date of completion. Any goodwill or discount arising on the acquisition will be determined as the excess or deficit of the purchase price to be incurred by the Group over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of Pride Eagle Group at the date of completion. Negative goodwill resulting from the business combinations should be recognised immediately in the consolidated income statement.

The adjustment reflects the following:

The total consideration to be settled by Rich Key Enterprises Limited (the “Purchaser”), a wholly-owned subsidiary of the Company for the First Acquisition is approximately HK$1,200 million which shall be satisfied by:
(a) Issuing a promissory note (the “Promissory Note I”) or in cash payment (solely at the option of the Purchaser) of HK$100 million to Mr. Wu Jixian (the “Vendor”). In preparing the unaudited Pro Forma Financial Information, it is assumed that the Purchaser would choose to settle the consideration by cash.
(b) Issuing of convertible bonds of HK$1,100 million (the “Tranche 1 Bonds) at a conversion price of HK$0.40 per conversion share. Tranche 1 Bonds will not accrue any interest with a repayment term of 5 years.
The pro forma adjustments of approximately HK$4,519,000, HK$18,755,000 and HK$150,000 represented the increase on fair values on property, plant and equipment, prepaid lease payments of non-current portion and current portion, respectively held by Huscoke Group. The fair values of these assets as at 31 December 2007 were determined with reference to valuation as at 31 December 2007 carried out by B.I. Appraisals Limited, an independent qualified valuer not connected to the Group.
Goodwill of approximately HK$1,192,210,000 arising from the acquisition of Pride Eagle Group was derived from the fair values of total consideration less net assets of Pride Eagle Group as at 31 December 2007.

– 153 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

Pursuant to HKFRS 3, HKAS 36 Impairment of Assets, goodwill should be tested annually for impairment, as well as when there is indication of impairment.

Goodwill of approximately HK$1,192,210,000 arising from the First Acquisition is derived from calculation as follows:

Consideration for the First Acquisition Less: Net liabilities of Huscoke Group as at 31 December 2007 Fair value adjustment on property, plant and equipment Fair value adjustment on prepaid lease payments Goodwill arising from acquisition	HK$000 1,200,000 15,634 (4,519) (18,905) 1,192,210

The directors of the Company consider that the net assets value of Pride Eagle is not material to the Enlarged Group I, no net assets value of Pride Eagle was used in calculation of goodwill accordingly.

The pro forma adjustments represented the re-allocation of balances to other receivables or other payables assuming First Acquisition has been completed on 31 December 2006.
The pro forma adjustment of HK$10,000 represented the elimination of Huscoke Group’s share capital upon the consolidation of Enlarged Group I.
The pro forma adjustment of reserves of approximately HK$236,954,000 represented the elimination of the pre-acquisition reserves of Huscoke Group of approximately HK$15,644,000 and the equity component of Tranche 1 Bonds of approximately HK$221,310,000. For further details of the equity component of Tranche 1 Bonds, please refer to note 7 and 8.
In accordance with HKAS 32 “Financial Instrument: Disclosure and Presentation”, convertible bonds should be separated as liability component and equity component. In preparing the unaudited pro forma financial information, the face value of HK$1,100,000,000 has been taken to be its fair value as if it was issued on 31 December 2006. The adjustment of Tranche 1 Bonds of approximately HK$831,746,000 in the pro forma consolidated balance sheet represented the liability component of Tranche 1 Bonds based on the discounted cash flows method at the discount rate of approximately 5.75%.

– 154 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP I

The pro forma adjustment of approximately HK$46,944,000 represented the deferred tax liabilities arising from Tranche 1 Bonds as at 31 December 2007.
The pro forma adjustment of approximately HK$1,054,000 represented the adjustment on depreciation charges for the year ended 31 December 2006 in responses to the fair value adjustment as mentioned in note 2.
The pro forma adjustment of HK$47,825,000 represented the imputed interest expenses for Tranche 1 Bonds with the rate of 5.75% for the year ended 31 December 2006.
The pro forma adjustment of HK$100,000,000 represented guaranteed net profit pursuant to the sales and purchases agreement, in which the Vendor had irrevocably guarantees to the Purchaser that the net profit after minority interests but before tax of Pride Eagle Group for the financial year ended 31 December 2008 as shown in the audited accounts shall not be less than HK$100 million (the “Guaranteed 2008 Pride Eagle Group Net Profit”).
The pro forma adjustment of approximately HK$8,369,000 represented the adjustment of the deferred tax effect of Tranche 1 Bonds for the year ended 31 December 2006.
The calculation of pro forma basic earnings per share is based on the Enlarged Group I’s pro forma net profit attributable to the equity holders of the Company of HK$66,403,000 and the number of ordinary shares of 477,926,000 of the Enlarged Group I upon the completion of the First Acquisition.

Pro forma basic and diluted earnings per share were presented in a single line because the conversion of the Tranche 1 Bonds was antidilutive while its conversion would increase the pro forma earnings per share.

The pro forma adjustments to the consolidated cash flow statement of approximately HK$51,121,000 represented the recognition of Guaranteed 2008 Pride Eagle Group Net Profit of HK$100,000,000, depreciation charges of approximately HK$1,054,000 and annual finance costs of HK$47,825,000 for the purpose of adjusting the profit before taxation.

– 155 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

==> picture [193 x 71] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

20 March 2008

The Directors

Frankie Dominion International Limited 1st Floor, Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang HONG KONG

Dear Sirs,

We report on the unaudited pro forma financial information of Frankie Dominion International Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) together with The Acquired Plants and Machineries as defined in Appendix III (together with the Group hereinafter referred to as the “Enlarged Group II”) (the “Unaudited Pro Forma Financial Information”) which has been prepared by the directors of the Company for illustrative purpose only, to provide information about how the proposed acquisition of Joy Wisdom Group (the “Second Acquisition”), might have affected the financial information presented for inclusion in Appendix I of the circular of the Company dated 20 March 2008 (the “Circular”). The basis of preparation for the Unaudited Pro Forma Financial Information on the Enlarged Group II is set out on page 159 to the Circular.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND REPORTING ACCOUNTANTS

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information on the Enlarged Group II in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

– 156 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

It is our responsibility to form an opinion as required by Rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information on the Enlarged Group II and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information on the Enlarged Group II beyond that owned to those to whom those reports were addressed by us at the dates of their issue.

BASIS OF OPINION

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements (“HKSIR”) 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information on the Enlarged Group II with the directors of the Company. The engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information on the Enlarged Group II has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group II as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Our work did not constitute an audit or review made in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, and accordingly, we do not provide any such audit or review assurance on the Unaudited Pro Forma Financial Information.

The Unaudited Pro Forma Financial Information on the Enlarged Group II is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Enlarged Group II as at 31 December 2006 or any future date; or
the financial results and cash flows of the Enlarged Group II for the year ended 31 December 2006 or for any future period.

– 157 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

OPINION

In our opinion:

the Unaudited Pro Forma Financial Information on the Enlarged Group II has been properly compiled by the directors of the Company on the basis stated;
such basis is consistent with the accounting policies of the Group; and
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group II as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithfully

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

– 158 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

1. Introduction

The Unaudited Pro Forma Financial Information on the Enlarged Group II has been prepared to illustrate the effect of the Second Acquisition.

The Unaudited Pro Forma Financial Information on the Enlarged Group II has been prepared in accordance with the Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the Second Acquisition as if the Second Acquisition took place on 31 December 2006 for the consolidated balance sheet and on 1 January 2006 for the consolidated income statement and consolidated cash flow statement.

The unaudited pro forma consolidated balance sheet of the Enlarged Group II is prepared based on the audited consolidated balance sheet of the Group as at 31 December 2006 as set out in Appendix I to the Circular, after making pro forma adjustments relating to the Second Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

The unaudited pro forma consolidated income statement is prepared based on the audited consolidated income statement of the Group for the year ended 31 December 2006 as set out in Appendix I to the Circular and the Financial Information of the Acquired Plants and Machineries for the year ended 31 December 2007 as set out in Appendix III to the Circular after translation into Hong Kong dollars at exchange rate of HK$1= RMB0.9977, after making pro forma adjustments relating to the Second Acquisition as if the Second Acquisition had been completed on 1 January 2006.

The financial information of Joy Wisdom International Limited and Huscoke International Investment Limited, a wholly-owned subsidiary of Joy Wisdom, (“Huscoke International”) (collectively referred to as the “Joy Wisdom Group”) are not presented in the Unaudited Pro Forma Financial information because the directors of the Company consider that the financial information of Joy Wisdom and Huscoke International are not material to the Unaudited Pro Forma Financial Information of Enlarged Group II.

The accompanying Unaudited Pro Forma Financial Information on the Enlarged Group II has been prepared by the directors of the Company for illustrative purpose only and is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Financial Information on the Enlarged Group II does not purport to describe the actual financial position of the Enlarged Group II that would have been attained has the Second Acquisition been completed on 31 December 2006 and to describe the actual financial results and cash flows of the Enlarged Group II that would have been attained has the Second Acquisition been completed on 1 January 2006, nor purport to predict the Enlarged Group II’s future financial position or results of operations.

The Unaudited Pro Forma Financial Information on the Enlarged Group II should be read in conjunction with the historical financial information on the Group as set out in Appendix I and other financial information included elsewhere in the Circular.

The Unaudited Pro Forma Financial Information on the Enlarged Group II has been prepared by the directors of the Company for illustrative purposes only and because of its nature, it may not give a true picture of financial position of the Enlarged Group II following completion of the Second Acquisition.

– 159 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

(I) Unaudited Pro Forma Consolidated Balance Sheet of the Enlarged Group II

The following is the unaudited pro forma consolidated balance sheet of the Enlarged Group II, assuming that the Second Acquisition has been completed on 31 December 2006. The information is based on the audited consolidated financial statements of the Group as at 31 December 2006 as set out in Appendix I to the Circular, affect making pro forma adjustments relating to the Second Acquisition. Such information is adjusted to reflect the effect of the Second Acquisition.

As the unaudited pro forma consolidated balance sheet of the Enlarged Group II has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Enlarged Group II as at the date to which it is made up to or at any future date.

				Unaudited
				Pro Forma
	Audited			Consolidated
	Consolidated			Balance
	Balance			Sheet of the
	Sheet of the			Enlarged
	Group as at			Group II as at
	31 December	Pro Forma		31 December
	2006	adjustments		2006
	HK$’000	HK$’000	Notes	HK$’000
ASSETS
Non-current assets
Property, plant and equipment	114,945	419,732	2	534,677
Prepaid lease payments	22,019			22,019
Interests in associate	315			315
Goodwill	–	822,241	3	822,241
Available-for-sale investment	880			880
	138,159			1,380,132
Current assets
Inventories	67,563			67,563
Debtors, bills receivable and
prepayments	92,810			92,810
Prepaid lease payments	627			627
Investments held for trading	8,630			8,630
Tax recoverable	1,949			1,949
Short term bank deposits	39,505			39,505
Short term pledged bank deposits	2,840			2,840
Bank balances and cash	41,919	(100,000)	1(a)	(58,081)
	255,843			155,843
Total assets	394,002			1,535,975

– 160 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

				Unaudited
				Pro Forma
	Audited			Consolidated
	Consolidated			Balance
	Balance			Sheet of the
	Sheet of the			Enlarged
	Group as at			Group II as at
	31 December	Pro Forma		31 December
	2006	adjustments		2006
	HK$’000	HK$’000	Notes	HK$’000
EQUITY
Capital and reserves
Share capital	47,793			47,793
Reserves	174,449	221,310	4	395,759
	222,242			443,552
Minority interest	–	41,973	5	41,973
Total equity	222,242			485,525
LIABILITIES
Current liabilities
Creditor, bill payable and
accrued charges	96,751			96,751
Amount due to an associate	294			294
Bank borrowings	70,029			70,029
	167,074			167,074
Non-current liabilities
Convertible bonds	–	831,746	6	831,746
Deferred taxation	4,686	46,944	7	51,630
	4,686			883,376
Total liabilities	171,760			1,050,450
Total equity and liabilities	394,002			1,535,975
Net current assets/(liabilities)	88,769			(11,231)
Total assets less current liabilities	226,928			1,368,901

– 161 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

(II) Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group II

The following is the unaudited pro forma consolidated income statement of the Enlarged Group II, assuming that the Second Acquisition has been completed on 1 January 2006. The information is based on the audited consolidated financial statements of the Group for the year ended 31 December 2006 as set out in Appendix I to the Circular and the Financial Information of the Acquired Plants and Machineries for the year ended 31 December 2007 as set out in Appendix III to the Circular after translation into Hong Kong dollars at exchange rate of HK$1=RMB0.9977. Such information is adjusted to reflect the effect of the Second Acquisition.

As the unaudited pro forma consolidated income statement of the Enlarged Group II has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the results of the Enlarged Group II for the year ended to which it is made up to or for any future period.

Revenue Cost of sales Gross profit Other income Distribution costs Administrative expenses Operating expenses Gain on disposal of an associate Change in fair value of investment held for trading Discount on acquisition of additional interests in a subsidiary Finance costs Share of profits of associates Profit before taxation Taxation Profit for the year	Audited Consolidated Income Statement of the Group for the year ended 31 December 2006 HK$’000 714,731 (645,465) 69,266 9,432 (24,637) (60,641) – 66 (117) 28,222 (5,793) 261 16,059 914 16,973	The Acquired Plants and Machineries for the year ended 31 Dececmber 2007 HK$’000 209,724 (177,930) 31,794 – (793) – (2,555) – – – – – 28,446 – 28,446	Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group II for the year ended Pro Forma 31 December Sub-total adjustments 2006 HK$’000 HK$’000 Notes HK$’000 924,455 924,455 (823,395) (823,395) 101,060 101,060 9,432 9,432 (25,430) (25,430) (60,641) (82,081) 8 (142,722) (2,555) (2,555) 66 66 (117) (117) 28,222 28,222 (5,793) (47,825) 9 (53,618) 261 261 44,505 (85,401) 914 8,369 10 9,283 45,419 (76,118)

– 162 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

Audited Consolidated Income Statement of the Group for the year ended 31 December 2006 HK$’000 Attributable to: Equity holders of the Company 18,912 Minority interests (1,939) 16,973 Earnings per share contributable to the equity holders of the Company – Basic and diluted 3.96 cents	The Acquired Plants and Machineries for the year ended 31 Dececmber 2007 HK$’000 25,601 2,845 28,446	Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group II for the year ended Pro Forma 31 December Sub-total adjustments 2006 HK$’000 HK$’000 Notes HK$’000 44,513 (74,179) 906 (2,845) 11 (1,939) 45,419 (76,118) 12 (15.52) cents

– 163 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

(III) Notes to the Unaudited Pro Forma Financial Information

Under HKFRS 3 Business Combinations (“HKFRS 3”), the Group will apply the purchase method to account for the Second Acquisition. In applying the purchase method, the identifiable assets, liabilities and contingent liabilities of Joy Wisdom Group will be recorded on the consolidated balance sheet of the Group at their fair values at the date of completion. In preparing the Unaudited Pro Forma Financial Information, the carrying amounts of the Acquired Plants and Machineries were assumed to be significantly, the same as net asset value of Joy Wisdom Group. Any goodwill or discount arising on the acquisition will be determined as the excess or deficit of the purchase price to be incurred by the Group over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of Joy Wisdom Group at the date of completion. Negative goodwill resulting from the business combinations should be recognised immediately in the consolidated income statement.

The adjustment reflects the following:

The total consideration to be settled by Rich Key Enterprises Limited (the “Purchaser”), a wholly-owned subsidiary of the Company for the Second Acquisition is approximately HK$1,200 million which shall be satisfied by:
(a) Issuing a promissory note (the “Promissory Note II”) or in cash payment (solely at the option of the Purchaser) of HK$100 million to Mr. Wu Jixian (the “Vendor”). In preparing the unaudited Pro Forma Financial Information, it is assumed that the Purchaser would choose to settle the consideration by cash.
(b) Issuing convertible bonds of HK$1,100 million (the “Tranche 2 Bonds) at a conversion price of HK$0.40 per conversion share. Tranche 2 Bonds will not accrue any interest with a repayment term of 5 years.
The pro forma adjustment of approximately HK$419,732,000 represented the Acquired Plants and Machineries obtained upon completion of the Second Acquisition. Details are set out as follows:

Market value as per valuation report, in RMB	RMB420,700,000
Exchange rate used in conversion
as at 31 December 2006	0.9977
Market value as per valuation report, in HKD	HK$419,732,000

– 164 –

APPENDIX IV PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

Goodwill of approximately HK$822,241,000 arising from the Second Acquisition was derived from the fair value of total consideration less net assets of Joy Wisdom Group as at 31 December 2007.

Pursuant to HKFRS 3, HKAS 36 Impairment of Assets, goodwill should be tested annually for impairment, as well as when there is indication of impairment.

Goodwill of approximately HK$822,241,000 arising from the Second Acquisition are derived from calculation as follows:

Consideration for the Second Acquisition Less: Net assets of 90% equity interest in Joy Wisdom Group as at 31 December 2007_(Note)_ Goodwill arising from acquisition	HK$000 1,200,000 (377,759) 822,241

Note: Net assets value at 90% equity interest in Joy Wisdom Group was assumed to be materially equivalent to the fair value of the Acquired Plants and Machineries as mentioned in note 2.

The pro forma adjustment of reserves of approximately HK$221,310,000 represented the equity component of Tranche 2 Bonds of approximately HK$221,310,000. For further details of the equity component of Tranche 2 Bonds, please refer to note 6 and 7.
The pro forma adjustment of approximately HK$41,973,000 represented 10% minority interest of a sino-foreign enterprises which will held interest in the Acquired Plants and Machineries.
In accordance with HKAS 32 “Financial Instrument: Disclosure and Presentation”, convertible bonds should be separated as liability component and equity component. In preparing the unaudited pro forma financial information, the face value of HK$1,100,000,000 has been taken to be its fair value as if it was issued on 31 December 2006. The adjustment of Tranche 2 Bonds of approximately HK$831,746,000 in the pro forma consolidated balance sheet represented the liability component of Tranche 2 Bonds based on the discounted cash flows method at the discount rate of approximately 5.75%.
The pro forma adjustment of approximately HK$46,944,000 represents the deferred tax liabilities arising from Tranche 2 Bonds as at 31 December 2007.

– 165 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP II

The pro forma adjustment of approximately HK$82,081,000 represented the adjustment on depreciation charges for the year ended 31 December 2006 on the Acquired Plants and Machineries in response to note 2.
The pro forma adjustment of HK$47,825,000 represented the imputed interest expenses for Tranche 2 Bonds with the rate of 5.75% for the year ended 31 December 2006.
The pro forma adjustment of approximately HK$8,369,000 represented the adjustment of the deferred tax effect of Tranche 2 Bonds for the year ended 31 December 2006.
The pro forma adjustment of approximately HK$2,845,000 represents the elimination of the 10% minority interest of the sino-foreign enterprises.
The calculation of pro forma basic earnings per share is based on the Enlarged Group II’s pro forma net profit attributable to the equity holders of the Company of HK$74,179,000 and the number of ordinary shares of 477,926,000 of the Enlarged Group II upon the completion of the Second Acquisition.

Pro forma basic and diluted earnings per share were presented in a single line because the conversion of the Tranche 2 Bonds was antidilutive while its conversion would increase the pro forma earnings per share.

– 166 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

==> picture [193 x 71] intentionally omitted <==

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

20 March 2008

The Directors

Frankie Dominion International Limited

1[st] Floor, Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang HONG KONG

Dear Sirs,

We report on the unaudited pro forma financial information of Frankie Dominion International Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”), Pride Eagle Investments Limited (“Pride Eagle”) and its subsidiaries (collectively referred to as the “Pride Eagle Group”) together with The Acquired Plants and Machineries as defined in Appendix III (together with the Group hereinafter referred to as the “Enlarged Group III”) (the “Unaudited Pro Forma Financial Information”) which has been prepared by the directors of the Company for illustrative purpose only, to provide information about how the proposed acquisition of Pride Eagle Group (the “First Acquisition”) and Joy Wisdom Group (the “Second Acquisition”), might have affected the financial information presented for inclusion in Appendix I of the circular of the Company dated 20 March 2008 (the “Circular”). The basis of preparation for the Unaudited Pro Forma Financial Information on the Enlarged Group III is set out on page 170 to the Circular.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND REPORTING ACCOUNTANTS

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information on the Enlarged Group III in accordance with Rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

– 167 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

It is our responsibility to form an opinion as required by Rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information on the Enlarged Group III and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information on the Enlarged Group III beyond that owned to those to whom those reports were addressed by us at the dates of their issue.

BASIS OF OPINION

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements (“HKSIR”) 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information on the Enlarged Group III with the directors of the Company. The engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information on the Enlarged Group III has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group III as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information on the Enlarged Group III is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Enlarged Group III as at 31 December 2006 or any future date; or
the financial results and cash flows of the Enlarged Group III for the year ended 31 December 2006 or for any future period.

– 168 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

OPINION

In our opinion:

the Unaudited Pro Forma Financial Information on the Enlarged Group III has been properly compiled by the directors of the Company on the basis stated;
such basis is consistent with the accounting policies of the Group; and
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information on the Enlarged Group III as disclosed pursuant to Rule 4.29(1) of the Listing Rules.

Yours faithfully

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

– 169 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

1. Introduction

The Unaudited Pro Forma Financial Information on the Enlarged Group III has been prepared to illustrate the effect of the First Acquisition and the Second Acqusition.

The Unaudited Pro Forma Financial Information on the Enlarged Group III has been prepared in accordance with the Rule 4.29 of the Listing Rules for the purpose of illustrating the effect of the First Acquisition and the Second Acquisition as if the First Acquisition and the Second Acquisition took place on 31 December 2006 for the consolidated balance sheet and on 1 January 2006 for the consolidated income statement and consolidated cash flow statement.

The unaudited pro forma consolidated balance sheet of the Enlarged Group III is prepared based on the audited consolidated balance sheet of the Group as at 31 December 2006 as set out in Appendix I to the Circular, the audited balance sheet of Huscoke International Group Limited, the sole subsidiary of Pride Eagle, (“Huscoke”) and its subsidiary (collectively referred to as the “Huscoke Group”) as at 31 December 2007 as set out in Appendix II to the Circular, after making pro forma adjustments relating to the First Acquisition and the Second Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

The unaudited pro forma consolidated income statement is prepared based on the audited consolidated income statement of the Group for the year ended 31 December 2006 as set out in Appendix I to the Circular, the audited consolidated income statement of Huscoke Group for the year ended 31 December 2007 as set out in Appendix II to the Circular and the Financial Information of the Acquired Plants and Machineries for the year ended 31 December 2007 as set out in Appendix III to the Circular after translation into Hong Kong dollars at exchange rate of HK$1=RMB0.9977, after making pro forma adjustments relating to First Acquisition and Second Acquisition as if the First Acquisition and the Second Acquisition had been completed on 1 January 2006.

The financial information of Pride Eagle, Joy Wisdom Limited (“Joy Wisdom”) and Huscoke International Investment Limited, a wholly-owned subsidiary of Joy Wisdom, (“Huscoke International”) are not presented in the Unaudited Pro Forma Financial information because the directors of the Company consider that the financial information of Pride Eagle, Joy Wisdom and Huscoke International are not material to the Unaudited Pro Forma Financial Information of Enlarged Group III.

The accompanying Unaudited Pro Forma Financial Information on the Enlarged Group III has been prepared by the directors of the Company for illustrative purpose only and is based on a number of assumptions, estimates and uncertainties. Accordingly, the Unaudited Pro Forma Financial Information on the Enlarged Group III does not purport to describe the actual financial position of the Enlarged Group III that would have been

– 170 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

attained has the First Acquisition and the Second Acquisition been completed on 31 December 2006 and to describe the actual financial results and cash flows of the Enlarged Group III that would have been attained has the First Acquisition and the Second Acquisition been completed on 1 January 2006, nor purport to predict the Enlarged Group III’s future financial position or results of operations.

The Unaudited Pro Forma Financial Information on the Enlarged Group III should be read in conjunction with the Accountants’ Report on the Huscoke Group as set out in Appendix II, the historical financial information on the Group as set out in Appendix I and other financial information included elsewhere in the Circular.

The Unaudited Pro Forma Financial Information on the Enlarged Group III has been prepared by the directors of the Company for illustrative purposes only and because of its nature, it may not give a true picture of financial position of the Enlarged Group III following completion of the First Acquisition and the Second Acqusition.

– 171 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

(I) Unaudited Pro Forma Consolidated Balance Sheet of the Enlarged Group III

The following is the unaudited pro forma consolidated balance sheet of the Enlarged Group III, assuming that the First Acquisition and the Second Acquisition have been completed on 31 December 2006. The information is based on the audited consolidated financial statements of the Group as at 31 December 2006 and the audited financial information of Huscoke Group as at 31 December 2007 as set out in Appendices I and II to the Circular respectively, after making pro forma adjustments relating to First Acquisition and Second Acquisition. Such information is adjusted to reflect the effect of the First Acquisition and the Second Acquisition.

As the unaudited pro forma consolidated balance sheet of the Enlarged Group III has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Enlarged Group III as at the date to which it is made up to or at any future date.

Audited
Audited Consolidated
Consolidated
Balance
Balance
Sheet of
Sheet of the
Huscoke
Group as at
Group as at
31 December 31 December
2006
2007
HK$’000
HK$’000
ASSETS
Non-current assets
Investment properties
–
57,300
Property, plant and equipment
114,945
11,602
Prepaid lease payments
22,019
50,845
Interests in associate
315
–
Goodwill
–
–
Available-for-sale investment
880
–
138,159
119,747
Current assets
Inventories
67,563
–
Debtors, bills receivable
and prepayments
92,810
18,826
Payment in advance
–
78,000
Prepaid lease payments
627
417
Investments held for trading
8,630
–
Tax recoverable
1,949
–
Short term bank deposits
39,505
–
Short term pledged bank
deposits
2,840
–
Bank balances and cash
41,919
3,882
255,843
101,125
Total assets
394,002
220,872

Unaudited
Pro Forma
Consolidated
Balance Sheet
Pro Forma
of the Enlarged
adjustments
Group III as at
for Acquisition
31 December
Sub-total
First
Second
2006
HK$’000
HK$’000
HK$000
Notes
HK$’000
57,300
57,300
126,547
4,519
419,732
2
550,798
72,864
18,755
2
91,619
315
315
–
1,192,210
822,241
3
2,014,451
880
880
257,906
2,715,363
67,563
67,563
111,636
111,636
78,000
78,000
1,044
150
2
1,194
8,630
8,630
1,949
1,949
39,505
39,505
2,840
2,840
45,801
(100,000 )
(100,000)
1(a)
(154,199 )
356,968
157,118
614,874
2,872,481

– 172 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

Audited
Audited Consolidated
Consolidated
Balance
Balance
Sheet of
Sheet of the
Huscoke
Group as at
Group as at
31 December 31 December
2006
2007
HK$’000
HK$’000
EQUITY
Capital and reserves
Share capital
47,793
10
Reserves/(Accumulated loss)
174,449
(15,644)
222,242
(15,634)
Minority interest
–
–
222,242
(15,634)
LIABILITIES
Current liabilities
Creditor, bill payable
and accrued charges
96,751
3,909
Receipt in advance
–
156,000
Amount due to a director
–
11,107
Amount due to a related
company
–
271
Amount due to an associate
294
–
Bank borrowings
70,029
6,383
Tax payable
–
1,075
167,074
178,745
Non-current liabilities
Convertible bonds
–
–
Bank borrowings
–
56,034
Deferred taxation
4,686
1,727
4,686
57,761
Total liabilities
171,760
236,506
Total equity and liabilities
394,002
220,872
Net current assets/(liabilities)
88,769
(77,620)
Total assets less current
liabilities
226,928
42,127

Unaudited
Pro Forma
Consolidated
Balance Sheet
Pro Forma
of the Enlarged
adjustments
Group III as at
for Acquisition
31 December
Sub-total
First
Second
2006
HK$’000
HK$’000
HK$000
Notes
HK$’000
47,803
(10)
5
47,793
158,805
236,954
221,310
6
617,069
206,608
664,862
–
41,973
7
41,973
206,608
706,835
100,660
11,378
4
112,038
156,000
156,000
11,107
(11,107 )
4
–
271
(271)
4
–
294
294
76,412
76,412
1,075
1,075
345,819
345,819
–
831,746
831,746
8
1,663,492
56,034
56,034
6,413
46,944
46,944
9
100,301
62,447
1,819,827
408,266
2,165,646
614,874
2,872,481
11,149
(188,701 )
269,055
2,526,662

– 173 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

(II) Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group III

The following is the unaudited pro forma consolidated income statement of the Enlarged Group III, assuming that the First Acquisition and the Second Acquisition have been completed on 1 January 2006. The information is based on the audited consolidated financial statements of the Group for the year ended 31 December 2006, the audited financial information of Huscoke Group for the year ended 31 December 2007 and the Financial Information of the Acquired Plants and Machineries for the year ended 31 December 2007 after translation into Hong Kong dollars at exchange rate of HK$1=RMB0.9977. as set out in Appendices I, II and III to the Circular respectively. Such information is adjusted to reflect the effect of First Acquisition and Second Acquisition.

As the unaudited pro forma consolidated income statement of the Enlarged Group III has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the results of the Enlarged Group III for the year ended to which it is made up to or for any future period.

Audited
Audited
Consolidated Consolidated
The
Income
Income
Acquired
Statement Statement of
Plants and
of the
Huscoke
Machineries
Group for the Group for the
for the
year ended
year ended
year ended
31 December 31 December 31 December
2006
2007
2007
HK$’000
HK$’000
HK$’000
Revenue
714,731
116,003
209,724
Cost of sales
(645,465 )
(98,996 )
(177,930 )
Gross profit
69,266
17,007
31,794
Other revenue
–
1,749
–
Other income
9,432
–
–
Distribution costs
(24,637 )
(3,464 )
(793 )
Administrative expenses
(60,641 )
(4,948 )
–
Operating expenses
–
–
(2,555 )
Change in fair value of
investment properties
–
10,031
–
Gain on disposal of an associate
66
–
–
Change in fair value of
investment held for trading
(117 )
–
–
Discount on acquisition of
additional interests in
a subsidiary
28,222
–
–
Impairment loss in respect of
amount due from the
immediate holding company
–
(28,590 )
–
Finance costs
(5,793 )
(982 )
–
Share of profits of associates
261
–
–
Guaranteed net profit
–
–
–
Profit/(loss) before taxation
16,059
(9,197 )
28,446
Taxation credit
914
(2,802 )
–
Profit/(loss) for the year
16,973
(11,999 )
28,446

Unaudited
Pro Forma
Consolidated
Income
Statement
of the
Enlarged
Pro Forma
Group III
adjustments
as at
for Acquisition
31 December
Sub-total
First
Second
2006
HK$’000
HK$’000
HK$000
Notes
HK$’000
1,040,458
1,040,458
(922,391 )
(922,391 )
118,067
118,067
1,749
1,749
9,432
9,432
(28,894 )
(28,894 )
(65,589 )
(1,054 )
(82,081 )
10
(148,724 )
(2,555 )
(2,555 )
10,031
10,031
66
66
(117 )
(117 )
28,222
28,222
(28,590 )
(28,590 )
(6,775 )
(47,825 )
(47,825 )
11
(102,425 )
261
261
–
100,000
12
100,000
35,308
(43,477 )
(1,888 )
8,369
8,369
13
14,850
33,420
(28,627 )

– 174 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

Audited Consolidated Income Statement of the Group for the year ended 31 December 2006 HK$’000 18,912 (1,939	Audited Consolidated The Income Acquired Statement of Plants and Huscoke Machineries Group for the for the year ended year ended 31 December 31 December 2007 2007 HK$’000 HK$’000 (11,999 ) 25,601 ) – 2,845	Audited Consolidated The Income Acquired Statement of Plants and Huscoke Machineries Group for the for the year ended year ended 31 December 31 December 2007 2007 HK$’000 HK$’000 (11,999 ) 25,601 ) – 2,845
16,973	(11,999	) 28,446

3.96 cents	(119,990) cents

– 175 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

(III) Notes to the Unaudited Pro Forma Financial Information

Under HKFRS 3 Business Combinations (“HKFRS 3”), the Group will apply the purchase method to account for the First Acquisition and the Second Acquisition. In applying the purchase method, the identifiable assets, liabilities and contingent liabilities of Pride Eagle Group and Joy Wisdom Group will be recorded on the consolidated balance sheet of the Group at their fair values at the date of completion. Any goodwill or discount arising on the acquisition will be determined as the excess or deficit of the purchase price to be incurred by the Group over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of Pride Eagle Group and Joy Wisdom Group at the date of completion. In preparing the unaudited Pro Forma Financial Information, the carrying amounts of the Acquired Plants and Machineries are assumed to be significantly, the same as the net asset value of Joy Wisdom Group. Negative goodwill resulting from the business combinations should be recognised immediately in the consolidated income statement.

The adjustment reflects the following:

The total consideration to be settled by Rich Key Enterprises Limited (the “Purchaser”), a wholly-owned subsidiary of the Company for the First Acquisition and the Second Acquisition are both HK$1,200 million which shall be satisfied by:
(a) Issuing a promissory note (the “Promissory Note I” and “Promissory Note II”) or in cash payment (solely at the option of the Purchaser) of HK$100 million to Mr. Wu Jixian (the “Vendor”). In preparing the unaudited Pro Forma Financial Information, it is assumed that the Purchaser would choose to settle the consideration by cash.
(b) Issuing convertible bonds of HK$1,100 million (the “Tranche 1 Bonds” and “Tranche 2 Bonds”) at a conversion price of HK$0.40 per conversion share. Tranche 1 Bonds and Tranche 2 Bonds will not accrue any interest with a repayment term of 5 years.
The pro forma adjustments of approximately HK$4,519,000, HK$18,755,000 and HK$150,000 for the First Acquisition represented the increase on fair values on property, plant and equipments and prepaid lease payments of non-current portion and current portion respectively held by Huscoke Group. The fair values of these assets as at 31 December 2007 were determined with reference to valuation as at 31 December 2007 carried out by B.I. Appraisals Limited, an independent qualified valuer not connected to the Group.

– 176 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

The pro forma adjustment of approximately HK$419,732,000 for the Second Acquisition represents the Acquired Plants and Machineries obtained upon completion of the Second Acquisition. Details are set out as follows:

Market value as per valuation report, in RMB	RMB420,700,000
Exchange rate used in conversion
as at 31 December 2006	0.9977
Market value as per valuation report, in HKD	HK$419,732,000

Goodwill arising from the First Acquisition and the Second Acquisition were derived from the fair values of total consideration less net assets of Pride Eagle Group and Joy Wisdom Group respectively as at 31 December 2007.

Pursuant to HKFRS 3, HKAS 36 Impairment of Assets, goodwill should be tested annually for impairment, as well as when there is indication of impairment.

Goodwill of approximately HK$1,192,210,000 and HK$822,241,000 arising from the First Acquisition and the Second Acquisition respectively are derived from calculation as follows:

Consideration Less: Net assets of 100% equity interest in Huscoke Group/90% equity interest in Joy Wisdom Group as at 31 December 2007_(Note)_ Fair value adjustment on property, plant and equipment Fair value adjustment on prepaid lease payments Goodwill arising from acquisition	First Acquisition HK$’000 1,200,000 15,634 (4,519) (18,905) 1,192,210	Second Acquisition HK$’000 1,200,000 (377,759 – –
		822,241

Note: Net assets value of 90% equity interest in Joy Wisdom Group was assumed to be materially equivalent to the fair value of the Acquired Plants and Machineries as mentioned in note 2.

– 177 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

The pro forma adjustments represented re-allocation of balances to other receivables or other payables assuming the First Acquisition has been completed on 31 December 2006.
The pro forma adjustment of HK$10,000 represented the elimination of Huscoke Group’s share capital upon the consolidation of Enlarged Group III.
The pro forma adjustment of reserves of approximately HK$236,954,000 for the First Acquisition and HK$221,310,000 for the Second Acquisition represent the followings:

Elimination of the pre-acquisition reserves Equity component of Tranche 1 Bonds/ Tranche 2 Bonds Goodwill arising from acquisition	First Acquisition HK$’000 15,644 221,310 236,954	Second Acquisition HK$’000 – 221,310
		221,310

For further details of the equity component of Tranche 1 Bonds and Tranche 2 Bonds, please refer to note 8 and 9.

The pro forma adjustment of approximately HK$41,973,000 represented 10% minority interest of a sino-foreign enterprises which will held interest in the Acquired Plants and Machineries of Second Acquisition.
In accordance with HKAS 32 “Financial Instrument: Disclosure and Presentation”, convertible bonds should be separated as liability component and equity component. In preparing the unaudited pro forma financial information, the face value of HK$1,100,000,000 has been taken to be its fair value as if it was issued on 31 December 2006. The adjustment of approximately HK$831,746,000 for both Tranche 1 Bonds and Tranche 2 Bonds in the pro forma consolidated balance sheet represented the liability component of both and Tranche 1 Bonds and Tranche 2 Bonds based on the discounted cash flows method at the discount rate of approximately 5.75%.
The pro forma adjustment of approximately HK$46,944,000 represented the deferred tax liabilities arising from both Tranche 1 Bonds and Tranche 2 Bonds as at 31 December 2007.

– 178 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP III

The pro forma adjustment of approximately HK$1,054,000 for First Acquisition represented the adjustment on depreciation charges for the year ended 31 December 2006 in responses to the fair value adjustment as mentioned in note 2 while the pro forma adjustment of approximately HK$82,081,000 for Second Acquisition represented the depreciation charge incurred by the Acquired Plants and Machineries as mentioned in note 2 for the year ended ended 31 December 2006.
The pro forma adjustment of HK$47,825,000 represented the imputed interest expenses for Tranche 1 Bonds and Tranche 2 Bonds with the rate of 5.75% for the year ended 31 December 2006.
The pro forma adjustment of HK$100,000,000 represented guaranteed net profit pursuant to the sales and purchases agreement, in which the Vendor had irrevocably guarantees to the Purchaser that the net profit after minority interests but before tax of Pride Eagle Group for the financial year ended 31 December 2008 as shown in the audited accounts shall not be less than HK$100 million (the “Guaranteed 2008 Pride Eagle Group Net Profit”).
The pro forma adjustment of approximately HK$8,369,000 represented the adjustment of the deferred tax effect of Tranche 1 Bonds and Tranche 2 Bonds for the year ended 31 December 2006.
The pro forma adjustment of approximately HK$2,845,000 represents the elimination of the 10% minority interest of the sino-foreign enterprises.
The calculation of pro forma basic loss per share is based on the Enlarged Group III’s pro forma net loss attributable to the equity holders of the Company of HK$26,688,000 and the number of ordinary shares of 477,926,000 of the Enlarged Group III upon the completion of the First Acquisition and the Second Acquisition.

Pro forma basic and diluted earnings per share were presented in a single line because the conversion of neither Tranche 1 Bonds nor Tranche 2 Bonds was anti-dilutive while their conversion would increase the pro forma earnings per share.

– 179 –

APPENDIX V

VALUATION REPORT ON THE HUSCOKE GROUP

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==> picture [197 x 48] intentionally omitted <==

Unit 1301, 13th Floor, Tung Wai Commercial Building, 109-111 Gloucester Road, Wan Chai, Hong Kong Tel: (852) 21277762 Fax: (852) 21379876 Email: [email protected] Website: www.bisurveyors.com.hk

The Directors

Frankie Dominion International Limited

1st Floor, Yally Industrial Building 6 Yip Fat Street, Wong Chuk Hang Hong Kong

20 March 2008

Dear Sirs,

In accordance with the instructions from Frankie Dominion International Limited (hereinafter referred to as the “Company”) for us to value two properties (details of which are listed in the Summary of Values below, hereinafter referred to as the “Properties”), which are held by Huscoke International Group Limited (hereinafter referred to as “Huscoke”) and/or its subsidiaries (hereinafter collectively referred to as “Huscoke Group”), we confirm that we have carried out inspection, conducted land searches at Urban Land Registry, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of each of the Properties as at 31 December 2007 (hereinafter referred to as the “Date of Valuation”).

It is our understanding that this valuation document is to be used for reference purpose in relation to the proposed acquisition of certain equity interest of the holding company of Huscoke Group, and for the purpose of inclusion in a circular to be issued by the Company regarding the proposed acquisition.

This letter, forming part of our valuation report, identifies the properties being valued, explains the basis and methodology of our valuations, and lists out the assumptions and the title investigation we have made in the course of our valuations, as well as the limiting conditions.

BASIS OF VALUATION

Our valuation of each of the Properties is our opinion of its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

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APPENDIX V VALUATION REPORT ON THE HUSCOKE GROUP

We have valued the properties on the basis that each of them is considered individually. We have not allowed for any discount for the properties to be sold to a single party nor taken into account any effect on the values if the properties are to be offered for sale at the same time as a portfolio.

Our valuations have been carried out in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) issued by the Hong Kong Institute of Surveyors and under generally accepted valuation procedures and practices, which are in compliance with Chapter 5 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Practice Note 12 issued by The Stock Exchange of Hong Kong Limited.

VALUATION METHODOLOGY

In valuing the properties in Group I, which are held for owner-occupation by Huscoke Group, we have adopted the Direct Comparison Approach by making reference to comparable sales evidence as available in the relevant market.

In arriving at the value for the property in Group II, which is held for investment by Huscoke Group, we have adopted the Investment Approach by taking into account the current rents passing and the reversionary potential of such property.

VALUATION ASSUMPTIONS

Our valuations have been made on the assumption that the Properties are sold on the open market without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement that would serve to affect their values. In addition, no account has been taken of any option or right of pre-emption concerning or effecting sales of the Properties and no forced sale situation in any manner is assumed in our valuations.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings of an onerous nature that could affect their values.

TITLE INVESTIGATION

We have caused searches to be made at the Urban Land Registry. However, we have not scrutinized the original documents to ascertain ownership or to verify any amendments that may not appear on the copies handed to us. All documents and leases have been used for reference only.

LIMITING CONDITIONS

We have inspected the exterior and, where possible, the interior of the Properties. In the course of our inspection, we did not note any serious defects. However, no structural survey has been made nor have any tests been carried out on any of the building services provided in the Properties. We are, therefore, not able to report that the Properties are free from rot, infestation or any other structural defects.

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APPENDIX V

VALUATION REPORT ON THE HUSCOKE GROUP

We have not conducted any on-site measurement to verify the floor areas of the Properties but have assumed that the areas shown on the documents and floor plans furnished to us are correct. Dimensions, measurements and areas included in the valuation certificates attached are based on information contained in the documents provided to us by the Company and are therefore approximations only.

Moreover, we have not carried out any site investigations to determine or otherwise the suitability of the ground conditions, the presence or otherwise of contamination and the provision of or otherwise suitability for services etc. for any future development. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred in the event of any development.

We have relied to a considerable extent on the information provided by the Company and accepted advice given to us on such matters as planning approvals, statutory notices, easements, tenure, particulars of occupancy, tenancy schedule, floor areas and all other relevant matters in the identification of the Properties.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We were also advised by the Company that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

REMARKS

Unless otherwise stated, all monetary amounts stated in our valuation certificates are in Hong Kong Dollars (HK$).

We hereby confirm that we have neither present nor prospective interests in the Company, Huscoke Group, the Properties or the values reported herein.

Our valuations are summarized below and the valuation certificates are attached herewith.

Yours faithfully, For and on behalf of

B.I. APPRAISALS LIMITED William C. K. Sham Registered Professional Surveyor (G.P.) China Real Estate Appraiser MRICS, MHKIS, MCIREA Executive Director

Note: Mr. William C. K. Sham is a qualified valuer on the approved List of Property Valuers for Undertaking Valuation for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers published by the Hong Kong Institute of Surveyors. Mr. Sham has over 25 years’ experience in the valuation of properties in Hong Kong and has over 10 years’ experience in the valuation of properties in the People’s Republic of China and the Asia Pacific regions.

– 182 –

APPENDIX V

VALUATION REPORT ON THE HUSCOKE GROUP

SUMMARY OF VALUES

		Market value
	in	existing state as at
Property		31 December 2007
		(HK$)
Group I – Property interests held and occupied by Huscoke Group
1.	Offices 1613 and 1615 on 16th Floor, Tower Two,	29,300,000
	Lippo Centre, No. 89 Queensway, Hong Kong
2.	Portions of Units Nos. 4203-4 on 42nd Floor,	55,800,000
	Far East Finance Centre, No. 16 Harcourt Road,
	Hong Kong
Group II – Property interest held for investment by Huscoke Group
3.	Portions of Units Nos. 4203-4 (currently known as 4203	57,300,000
	and 4206) on 42nd Floor, Far East Finance Centre,
	No. 16 Harcourt Road, Hong Kong
	Total:	142,400,000

– 183 –

APPENDIX V VALUATION REPORT ON THE HUSCOKE GROUP

VALUATION CERTIFICATE

Group I – Property interests held and occupied by Huscoke Group

Property	Property	Description and tenure
1.	Offices 1613 and	Lippo Centre (the “Subject
	1615 on 16th	Development”), completed in
	Floor, Tower Two,	about 1988, is located on the
	Lippo Centre,	northeastern side of Queensway
	No. 89	at that section between Tamar
	Queensway,	Street and Cotton Tree Drive. It
	Hong Kong	falls within a “Commercial” zone
		on Central Outline Zoning Plan
	118180/952467th	No. S/H4/12 dated 18 February
	of 1217/102750th	2003.
	equal and
	undivided parts	The Subject Development
	or shares of and	comprises two high-rise office
	in Inland	towers erected over a common
	Lot No. 8615	commercial/car park podium.
		The subject Tower Two is of
		36-storey over podium.
		The property comprises two
		adjoining office units on 16th
		Floor of Tower Two of the
		Subject Development.
		The saleable area of the property
		is approximately 118.18 sq.m.
		(1,272 sq.ft.).
		Inland Lot No. 8615 is held from
		the Government under
		Conditions of Sales No. UB11720
		for a term of 75 years renewable
		for a further term of 75 years
		commenced from 15 February
		1984.
		The Government Rent for the
		whole lot is $1,000 per annum.

	Market value
Particulars of	in existing state as at
occupancy	31 December 2007
The property is	$29,300,000
occupied by Huscoke
Group for office use.

Notes :

1) The registered owner of the property is Huscoke International Group Limited vide Memorial No. 05052502700941 dated 28 April 2005 at a consideration of $15,343,500.
2) The property is subject to a Mortgage to secure all moneys in respect of general banking facilities and interest thereon in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 05052502700950 dated 28 April 2005.

– 184 –

APPENDIX V

VALUATION REPORT ON THE HUSCOKE GROUP

VALUATION CERTIFICATE

Market value Particulars of in existing state as at Property Description and tenure occupancy 31 December 2007 2. Portions of Units Far East Finance Centre, 4205 and 4208 are $55,800,000 Nos. 4203-4 on completed in about 1982 occupied by Huscoke 42nd Floor, Far comprises a 44-storey Group for office use, East Finance commercial building erected whereas 4203 and Centre, No. 16 over two levels of basement car 4206 are leased to Harcourt Road, park and is located on the third parties for office Hong Kong southwestern side of Harcourt use. Road at its junction with Cotton Part of Tree Drive. It falls within a 138/13200th equal “Commercial” zone on Central and undivided Outline Zoning Plan No. S/H4/12 parts or shares of dated 18 February 2003. and in Inland Lot No. 8466 Units 4203-4 form approximately half of the 42nd Floor of the subject building and has been subdivided into four units redesignated as 4203, 4205, 4206 and 4208 and a corridor. The property comprises 4205 and 4208 together with the corridor. The saleable area of the property, excluding the corridor with area of approximately 16.63 sq.m. (179 sq.ft.), is approximately 194.35 sq.m. (2,092 sq.ft.). Inland Lot No. 8466 is held from the Government under Conditions of Sales No. 11418 for a term of 75 years renewable for a further term of 75 years commenced from 23 July 1980. The Government Rent for the whole lot is $1,000 per annum.

Notes:

1) The registered owner of the property is Ocean Signal Limited vide Memorial No. 08010401070015 dated 7 December 2007 at a consideration of $90,000,000.
2) The property is subject to the following encumbrances registered in The Land Registry:
a) Mortgage for a consideration of all moneys in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 08010401070022 dated 7 December 2007; and
b) Rental Assignment in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 08010401070037 dated 7 December 2007.

– 185 –

APPENDIX V VALUATION REPORT ON THE HUSCOKE GROUP

VALUATION CERTIFICATE

Group II – Property interest held for investment by Huscoke Group

Property

Description and tenure

Particulars of occupancy

Market value in existing state as at 31 December 2007

Portions of Units Far East Finance Centre, Nos. 4203-4 completed in about 1982 (currently known comprises a 44-storey as 4203 and 4206) commercial building erected on 42nd Floor, Far over two levels of basement car East Finance park and is located on the Centre, No. 16 southwestern side of Harcourt Harcourt Road, Road at its junction with Cotton Hong Kong Tree Drive. It falls within a “Commercial” zone on Central Part of Outline Zoning Plan No. S/H4/12 138/13200th equal dated 18 February 2003. and undivided parts or shares of Units 4203-4 form approximately and in Inland Lot half of the 42nd Floor of the No. 8466 subject building and has been subdivided into four units redesignated as 4203, 4205, 4206 and 4208 and a corridor.

The property is leased $57,300,000 to third parties for office use.

The tenancy regarding 4203 is for a term due to expire on 6 August 2009 at a monthly rent of $52,934 and that of 4206 is for a term due to expire on 28 February 2009 at a monthly rent of $75,620. Both rentals are exclusive of airconditioning and management fees.

The property comprises 4203 and 4206. The saleable area of the property is approximately 214.88 sq.m. (2,313 sq.ft.).

Inland Lot No. 8466 is held from the Government under Conditions of Sales No. 11418 for a term of 75 years renewable for a further term of 75 years commenced from 23 July 1980.

The Government Rent for the whole lot is $1,000 per annum.

Notes:

1) The registered owner of the property is Ocean Signal Limited vide Memorial No. 08010401070015 dated 7 December 2007 at a consideration of $90,000,000.
2) The property is subject to the following encumbrances registered in The Land Registry:
a) Mortgage for a consideration of all moneys in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 08010401070022 dated 7 December 2007; and
b) Rental Assignment in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 08010401070037 dated 7 December 2007.

– 186 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

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==> picture [197 x 48] intentionally omitted <==

Unit 1301, 13th Floor, Tung Wai Commercial Building, 109-111 Gloucester Road, Wan Chai, Hong Kong Tel: (852) 21277762 Fax: (852) 21379876 Email: [email protected] Website: www.bisurveyors.com.hk

The Directors

Frankie Dominion International Limited 1st Floor, Yally Industrial Building 6 Yip Fat Street, Wong Chuk Hang Hong Kong

20 March 2008

Dear Sirs,

Re: The fixed assets held by 金岩電力煤化工有限公司 in its industrial complex located at Xiaowu Road, Xiaoyi City, Shanxi Province, the People’s Republic of China (the “PRC”)

In accordance with the instructions from Frankie Dominion International Limited (hereinafter referred to as the “Company”) for us to assess the market value of the fixed assets (hereinafter referred to as the “Fixed Assets”) in Xiaoyi City, Shanxi Province, which include buildings and structures (hereinafter referred to as the “Buildings”) and machines and equipment (hereinafter referred to as the “Machinery”), and which are exhibited to us as those held by 金岩電力煤化工有限公司 (Golden Rock Electric Coal Chemistry Co., Ltd., hereinafter referred to as “Golden Rock”) and/or its subsidiaries (hereinafter referred to as “Golden Rock Group”) for coal washing, electricity and warming heat supply as well as coal products transportation services, we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Fixed Assets as at 31 December 2007 (hereinafter referred to as the “Date of Valuation”).

It is our understanding that this valuation document is to be used for disclosure purpose in relation to the proposed acquisition of the Fixed Assets by the Company and/ or its subsidiaries (hereinafter together referred to as the “Group”).

This letter, forming part of our valuation report, identifies the fixed assets being valued; explains the basis and methodology of our valuation; lists out the assumptions, the title investigation and the limiting conditions made in the course of our valuation; and states our opinion of value.

– 187 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

BASIS OF VALUATION AND ASSUMPTIONS

The objective of our valuation is to provide an independent opinion of the market value of the invested capital by Golden Rock in the Fixed Assets as at the Date of Valuation at ongoing basis.

The market value is defined as “the estimated amount for which an asset should exchange on the Date of Valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

We further assumed that, subject to the above definition, both the buyer and the seller contemplate the retention of the Fixed Assets at their existing state for the continuation of the current operations as a going concern business, and both seeking their maximum economic self-interest in arriving at an arm’s-length transaction. The market value in continued existing use is further defined as the market value of an asset based on continuation of its existing use as part of an on-going business, assuming the asset could be sold in the open market for its existing use, and otherwise in keeping with the market value definition regardless of whether or not the existing use represents the highest and best use of the asset.

The opinion of the market value in continued existing use is not necessarily intended to represent the amount that might be realized from piecemeal disposal of the Fixed Assets or from some other alternate uses.

We have valued the Buildings and the Machinery on the basis that each of them is considered individually. Our valuation of the Fixed Assets is the aggregate value of the Buildings and the Machinery and we have not applied any bulk discount.

This investigation is concerned solely with the values of the Fixed Assets. Excluded from this investigation are land, supplies, inventories, materials on hand, spare parts and all other tangible assets of current nature and intangible assets that might exist. Our opinions of value are not related to the earning capacity of the business. It is assumed that prospective earnings are adequate to support the concluded value of the Fixed Assets plus the value of other assets not included in this valuation, and sufficient net working capital. This report does not attempt to arrive at the value of Golden Rock as a total business entity.

Our valuation on the market value of the Fixed Assets has been made on the assumption that the Fixed Assets have been completely built and/or installed as at the Date of Valuation and is sold on the open market without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement that would serve to affect the value of the Fixed Assets. In addition, no account has been taken of any option or right of pre-emption concerning or effecting sales of the Fixed Assets and no forced sale situation in any manner is assumed in our valuation.

– 188 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the fixed assets valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the Fixed Assets are free from encumbrances, restrictions and outgoings of an onerous nature that could affect their values.

Other specific assumptions, if any, have been stated in the footnotes of the valuation certificate.

VALUATION METHODOLOGY & PROCEDURES

In assessing the market value of the Buildings, we have adopted the Depreciated Replacement Cost (“DRC”) method. The DRC method is based on an estimate of the cost to reproduce or replace in new conditions the buildings and structures being valued in accordance with current construction costs for similar buildings and structures in the locality, with allowance for accrued depreciation as evidenced by observed condition or obsolescence present, whether arising from physical, functional or economic causes. The DRC method generally furnishes the most reliable indication of value for property in the absence of a known market based on comparable sales.

In arriving at our opinion of the market value of the Machinery, we have considered the three generally accepted methods to value: the Depreciated Replacement Cost Method, Market Comparable Method and Income Capitalization Method. The theory of each of these methods is outlined as follows:

1) The Depreciated Replacement Cost Method

The Depreciated Replacement Cost Method establishes value based on the cost of reproducing or replacing in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation arising from condition, utility, age, wear and tear, or physical deterioration and obsolescence present (functional or economic) taking into account past and present maintenance policy and rebuilding history.

Reproduction Cost New is defined as the estimated current cost of reproducing a new replica of an asset with the same or closely similar materials.

Replacement Cost New is defined as the estimated current cost of the new asset having the nearest equivalent utility as the asset being appraised.

Physical Deterioration is the loss in value of an asset from wear and tear of asset in operation and exposure to various elements.

Functional Obsolescence is the loss in value due to factors inherent in the asset itself and changes in design, materials, or process that result in inadequacy, over capacity, excess construction, lack of functional utility or excess operating costs, etc.

– 189 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

Economic Obsolescence is an incurable loss in value caused by unfavorable external conditions.

When market transactions of comparable assets are not available, when data cannot be extrapolated from larger transactions, or when transactions are nonexistent, under premise of continued use and assuming adequate earnings, the Depreciated Replacement Cost Method is the preferred appraisal procedure.

2) The Market Comparable Method

The Market Comparable Method involves the collection of market data pertaining to the subject assets being appraised. The primary intent of the Market Comparable Method is to determine the desirability of the assets through recent sales or offerings of similar assets currently on the market in order to arrive at an indication of the most probable selling price for the assets being appraised. If the comparable sales are not exactly similar to the asset being appraised, adjustments must be made to bring them as closely in line as possible with the subject asset.

Under the premise of continued use assuming adequate earnings, consideration is given to the cost to acquire similar equipment in the used-equipment market; an allowance then is made to reflect the costs for freight and installation.

3) The Income Capitalization Method

The Income Capitalization Method considers value in relation to the present worth of future benefits derived from ownership and is usually measured through the capitalization of a specific level of income. This approach is most applicable to investment and general-use properties where there is an established and identifiable rental market.

In any valuation study, all three approaches to value must be considered, as one or more approaches may be applicable to value the subject machinery and equipment. In some situations, elements of two or three approaches may be combined to reach an opinion of value.

In assessing the Machinery, since there is no identified active used-equipment market in the PRC that provides information on recent transactions of comparable items, the Market Comparable Method was not applied. On the other hand, since no identifiable rental income can be attributed to a specific piece of equipment or a group of equipment, the Income Capitalization Method to value was not applied. Therefore, we conclude that the Depreciated Replacement Cost Method is deemed to be the most appropriate method of assessing the Machinery under premise of continued use.

For the assets of standard manufacture, we used current manufacturers’ price lists, price quotations and price catalogs to determine the cost of replacement new. Allowances for freight and installation were sometimes required.

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APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

For the assets of special design or fabrication, we used current market price for labor, current market price for materials, manufactured components, design fees, engineering fees and contractors’ overhead, profit and fee to determine the cost of replacement new. Allowances for freight and installation were sometimes required.

Also, we adopted the assets index factor to estimate the cost of reproduction new of special design or fabrication machinery and equipment. An index factor is applied to the historical cost of valued equipment in order to estimate the current cost of the assets being valued.

The deductions for physical deterioration, functional obsolescence, and economic obsolescence have reflected observed condition; past maintenance and rebuilding history, if any; current use; and planned future utilization.

TITLE INVESTIGATION

In the course of our valuation, we have relied on the advice given by the Group regarding the title to the Buildings and the legal opinion prepared by 山西晉義律師事務所 (Shanxi Jin Yi Law Firm), the Group’s legal advisor on PRC law, regarding the title to and the interest of the Group in the Buildings.

We are not able to verify the ownership of the Machinery but we have been provided with copies of receipts regarding some major items of the Machinery. We have assumed no responsibility for the title to the Machinery. Unless otherwise stated, it is assumed that individual items of the Machinery are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values. It is further assumed that there are no hidden or unapparent conditions of the Machinery which would render them more or less valuable.

LIMITING CONDITIONS

Our valuations have been carried out in accordance with The HKIS Valuation Standards on Properties (1st Edition 2005) issued by the Hong Kong Institute of Surveyors and under generally accepted valuation procedures and practices, which are in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

We have carried out inspections of the Fixed Assets in the period from 29 to 31 January 2008. We have inspected the exterior and, where possible, the interior of the Buildings. However, no structural survey has been made nor have any tests been carried out on any of the building services provided in the Buildings. We are, therefore, not able to report that the Buildings is free from rot, infestation or any other structural defects. Yet, in the course of our inspection, we did not note any serious defects.

– 191 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

We have not conducted detailed on-site measurement to verify the correctness of the site and floor areas of the Buildings but have assumed that the areas shown on the documents made available to us are correct. Dimensions, measurements and areas included in the valuation certificate attached are based on information contained in the documents provided to us by the Group and are therefore approximations only.

We have relied to a considerable extent on the information and advices made available to us by Golden Rock Group on such matters as planning approvals, statutory notices, easements, tenure, particulars of occupancy, site and floor areas and all other relevant matters in the identification of the Fixed Assets. We have not seen original planning consents and have assumed that the Buildings will be erected, occupied and used in accordance with such consents.

We have personally conducted an ocular physical inspection of the Machinery, investigated market condition, interviewed personnel, and examined documents and specifications provided to us before arriving at our opinion of defined value. At the time of our inspections, the Machinery were observed to be generally in good working condition and properly maintained. Hence, we have assumed that the Machinery can perform efficiently according to the purposes for which it was designed and built.

We have accepted the records of the Machinery furnished to us by Golden Rock Group as properly describing the Machinery, their costs and their acquisition dates. We have relied to a considerable extent on such records, listings, specifications and documents in arriving at our opinion of value.

Any deferred maintenance, physical wear and tear, operating malfunctions, lack of utility, or other observable conditions distinguishing the Machinery from assets of like kind in new condition were noted and made part of our judgment in arriving at the value.

We have not investigated any industrial safety environmental and health-related regulations in association with this particular manufacturing process. It is assumed that all necessary licenses, procedures, and measures were implemented in accordance with the government legislation and guidance.

We have not investigated any financial data pertaining to the present or prospective earning capacity of the operation in which the Machinery is used. It was assumed that prospective earnings would provide a reasonable return on the fair market value of the Machinery, plus the value of any assets not included in this valuation, and adequate net working capital.

This valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events have not been considered and we are not required to update our report for such events and conditions.

– 192 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

To the best of our knowledge, all data set forth in this report are true and accurate. The data, opinions, or estimates identified as being furnished by others which have been used in formulating this analysis are gathered from reliable sources, yet, no guarantee is made nor liability assumed for their accuracy.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group and Golden Rock Group. We were also advised that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

REMARKS

Unless otherwise stated, all monetary amounts stated in the valuation certificate are in Renminbi (RMB).

We hereby confirm that we have neither present nor prospective interests in the Group, Golden Rock Group, the Fixed Assets, or the values reported herein.

Our valuation certificate is attached.

Yours faithfully, For and on behalf of

B.I. APPRAISALS LIMITED

William C. K. Sham Registered Professional Surveyor (G.P.) China Real Estate Appraiser MRICS, MHKIS, MCIREA Executive Director

Note: Mr. William C. K. Sham is a qualified valuer on the approved List of Property Valuers for Undertaking Valuation for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers published by the Hong Kong Institute of Surveyors. Mr. Sham has over 25 years’ experience in the valuation of properties in Hong Kong and has over 10 years’ experience in asset valuation in the People’s Republic of China and the Asia Pacific regions.

– 193 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

VALUATION CERTIFICATE

Fixed Assets

The fixed assets held by Golden Rock Group in its industrial complex located at Xiaowu Road, Xiaoyi City, Shanxi Province, the PRC

Description

The fixed assets comprise buildings and structures (the “Buildings”) together with the machines, equipment and vehicles (the “Machinery”) for coal washing, electricity and warming heat supply and transportation services for coal and ancillary products located within the industrial complex of Golden Rock Group at Xiaoyi City, Shanxi Province.

The Buildings include 17 blocks of 1 to 7-storey major buildings for office, workshop, warehouse, pump house, electricity distributions uses and various blocks of ancillary structures in the coal washing plant, the power plant, the heat generation plant and the transportation team within the industrial complex of Golden Rock Group. The Buildings were completed in about 2007.

Particulars of occupancy

The Fixed Assets are currently occupied by Golden Rock Group for coal washing, electricity and warming heat supply and transportation services for coal and ancillary products.

Market value in existing state as at 31 December 2007

RMB420,700,000 (See Note 5 below)

The total gross floor area of the major buildings is approximately 29,147.56 sq.m. (313,744 sq.ft.).

The Machinery comprises machines, equipment and vehicles for coal washing, electricity and warming heat supply and transportation services for coal and ancillary products together with the ancillary equipment in the industrial complex.

Major items of the Machinery include coal feeders, crushers, sieves, magnetic selection machines, boilers, turbines, transformers, filters, screens, conveyor belts, pumps, piping, electrical distribution system, office equipment, transportation equipment and trucks.

The various items of the Machinery were acquired within the period from 2006 to 2007, the origin of most of which are from the PRC.

– 194 –

APPENDIX VI

VALUATION REPORT ON THE COAL–RELATED ANCILLARY BUSINESS

VALUATION CERTIFICATE

Notes:

(1) Pursuant to a letter dated 9 November 2006 from the People’s Goverment of Xiaoyi City, approvals regarding the land use rights from relevant authorities were granted to Golden Rock Group to build its industrial complex (including the subject coal washing, power and warming heat supply plants and the premises of transportation team) on the existing site, and Golden Rock Group could proceed with the land registration at the State-owned Land Use Bureau.
(2) We have been further advised that applications for the relevant Certificates of Building Ownership are in process.
(3) The legal opinion of山西晉義律師事務所(Shanxi Jin Yi Law Firm) dated 14 March 2008 is summarized as follows:
a) Golden Rock Group can legally use the land under the PRC laws and land policy though ownership of the land use rights of the land on which the Buildings are standing has not been registered in the relevant authority.
b) The said land use rights cannot be executed in the manner as capital injection.
c) The Buildings were built by Golden Rock Group. The ownership of the Buildings is naturally vested in Golden Rock Group. Though the ownership has not been registered, it is protected by the PRC laws. Golden Rock Group has the legal ownership and usage right over the Buildings and can transfer the Buildings to third party.
(4) We have relied on the information provided by the Company, Golden Rock Group and the aforesaid legal opinion and prepared our valuation on the following assumptions:
a) Golden Rock is in possession of the proper legal title to the ownership of the buildings and structures being valued.
b) The Buildings has been constructed, occupied and used in full compliance with, and without contravention of all ordinances, except only where otherwise stated.
c) All consents, approvals, required licences, permits, certificates and authorizations have been obtained, except only where otherwise stated, for the use of the Buildings upon which our valuation is based.
(5) The breakdown of market value for the Buildings and the Machinery are RMB168,800,000 and RMB251,900,000 respectively, details of which are as follows:

Fixed Assets	Market value	Sub-total
	(RMB)	(RMB)
The Buildings		168,800,000
Coal Washing Plant	59,400,000
Electricity Generation Plant	58,000,000
Heat Energy Plant	36,600,000
Transportation Team	14,800,000
The Machinery		251,900,000
Coal Washing Plant	38,300,000
Electricity Generation Plant	139,300,000
Heat Energy Plant	54,600,000
Transportation Team	19,700,000

(6) The status of title and grant of major approvals, consents or licences in accordance with the information provided by the Company and the aforesaid legal opinion are as fo1lows:

Certificates of State-owned Land Use Certificate of Building Ownership

No No

– 195 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from Jones Lang LaSalle Sallmanns Limited, an independent valuer, in connection with its valuations as at 31 December 2007 of the property interests of the Group after the transaction.

Jones Lang LaSalle Sallmanns Limited 22nd Floor Siu On Centre 188 Lockhart Road Wanchai Hong Kong tel +852 2169 6000 fax +852 2169 6001

20 March 2008

The Directors

Frankie Dominion International Limited 1/F, Yally Industrial Building No. 6 Yip Fat Street Wong Chuk Hang Hong Kong

Dear Sirs,

In accordance with your instructions to value the property of which Frankie Dominion International Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in Hong Kong and the People’s Republic of China (the “PRC”), we confirm that we have carried out physical inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital value of the property interest as at 31 December 2007 (the “date of valuation”).

Our valuation of the property interest represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

We have valued the property interests in Groups I and II which are held by the Group by direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sales transactions as available in the relevant market.

Our valuation has been made on the assumption that the seller sells the property interest in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property interest.

– 196 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interest valued nor for any expense or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

In valuing the property interests of the Group in Hong Kong held under the Government Leases expiring before 30 June 1997, we have taken into account the stipulations contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China on the question of Hong Kong and the New Territories Leases (Extension) Ordinance 1988 that such leases have been extended without premium until 30 June 2047 and that a rent of three per cent of the then ratable value is charged per annum from the date of extension.

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Valuation Standards (6th Edition) published by the Royal Institution of Chartered Surveyors; and the HKIS Valuation Standards on Properties (1st Edition 2005) published by the Hong Kong Institute of Surveyors.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been provided with copies of title documents relating to the property interests and have caused searches to be made at the Hong Kong Land Registries. However, we have not searched the original documents to verify the ownership or to ascertain any amendment.

We have been shown copies of various title documents including Real Estate Title Certificates and official plans relating to the property interest and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interest in the PRC and any material encumbrance that might be attached to the property interest or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – Guangzhou Foreign Economic Law Office, concerning the validity of the Group’s title of the property interest in the PRC.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the property but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

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APPENDIX VII

VALUATION REPORT ON THE GROUP

We have inspected the exterior and, where possible, the interior of the property. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the property is free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

We hereby confirm that we have neither present nor prospective interest in the Group or the values reported.

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (RMB). The exchange rate adopted in our valuations is approximately HK$1 = RMB0.93 which was approximately the prevailing exchange rate as at the date of valuation.

Our valuation is summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of Jones Lang LaSalle Sallmanns Limited Paul L. Brown B.Sc. FRICS FHKIS Director

Note : Paul L. Brown is a Chartered Surveyor who has 25 years’ experience in the valuation of properties in the PRC and 28 years of property valuation experience in Hong Kong, the United Kingdom and the AsiaPacific region.

– 198 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

SUMMARY OF VALUES

GROUP I – PROPERTY INTERESTS OWNED AND OCCUPIED BY THE GROUP IN HONG KONG

No. Property 1. Factory Units A, B, C and D on 1st Floor Yally Industrial Building No. 6 Yip Fat Street Wong Chuk Hang Hong Kong 2. Factory Unit D on 3rd Floor Yally Industrial Building No. 6 Yip Fat Street Wong Chuk Hang Hong Kong 3. Car Parking Space No. 15 Yally Industrial Building No. 6 Yip Fat Street Wong Chuk Hang Hong Kong Sub-total:	Capital value in existing date as at 31 December 2007 HK$ 16,780,000 3,700,000 250,000
	20,730,000

– 199 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

GROUP II – PROPERTY INTERESTS HELD AND OCCUPIED BY THE GROUP IN THE PRC

No.
Property
4.
Units 1201-1206 on Level 12 and Unit 1306 on Level 13
Qin Jian Building
No. 468 West Huangpu Dadao
Tianhe District
Guangzhou
The PRC
5.
Car Parking Space Nos. 50 and 51 on 2nd Basement Level
Qin Jian Building
No. 468 West Huangpu Dadao
Tianhe District
Guangzhou
The PRC
6.
Flat G on Level 9 of Block 2
Yuefu Building
No. 839 Renmin North Road
Yuexiu District
Guangzhou
The PRC
Sub-total:
Grand total:

Capital value
in existing date
as at
31 December 2007
HK$
23,802,000
538,000
738,000

25,078,000

45,808,000

– 200 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

GROUP I – PROPERTY INTERESTS OWNED AND OCCUPIED BY THE GROUP IN HONG KONG

				Capital value
				in existing state
			Particulars of	as at
Property		Description and tenure	occupancy	31 December 2007
				HK$
1.	Factory Units A, B,	The property comprises the whole of	The property is	16,780,000
	C and D	the 1st floor of a 23-storey industrial	currently occupied by
	on 1st Floor	building completed in about 1974.	the Group for
	Yally Industrial		ancillary office and
	Building	The property has a total gross floor	showroom purposes.
	No. 6 Yip Fat Street	area of approximately 17,477 sq.ft.
	Wong Chuk Hang	(1,623.7 sq.m.).
	Hong Kong
		The property is held under the
	34/506th shares of	Conditions of Sale Nos. 10133 and
	Aberdeen Inland	10134, both for a term of 75 years
	Lot Nos. 361 and	commencing from 21 February 1972.
	362

Notes:

The registered owner of the property is Frankie Dominion (Holdings) Limited vide Memorial No. UB5169695 dated 2 October 1990.
Frankie Dominion (Holdings) Limited is a wholly-owned subsidiary of the Company.
The property is subject to a Deed of Mutual Covenant vide Memorial No. UB1121649 dated 21 October 1974.
The property is zoned under Aberdeen and Ap Lei Chau Outline Zoning Plan No. S/H15/24 dated 19 December 2006 for “Other Specified Uses (1) (Business)” zone.

– 201 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
Property		Description and tenure	occupancy	31 December 2007
				HK$
2.	Factory Unit D	The property comprises a unit on the	The property is	3,700,000
	on 3rd Floor	3rd floor of a 23-storey industrial	currently occupied by
	Yally Industrial	building completed in about 1974.	the Group for
	Building		warehouse purpose.
	No. 6 Yip Fat Street	The property has a gross floor area of
	Wong Chuk Hang	approximately 3,878 sq.ft.
	Hong Kong	(360.3 sq.m.).
	6/506th shares of	The property is held under the
	Aberdeen Inland	Conditions of Sale Nos. 10133 and
	Lot Nos. 361 and	10134, both for a term of 75 years
	362	commencing from 21 February 1972.

Notes:

The registered owner of the property is Rain and Coat Garment Factory Limited vide Memorial No. UB4316950 dated 23 December 1989.
As advised by the Company, Rain and Coat Garment Factory Limited is now renamed as Frankie Dominion (Holdings) Limited, a wholly-owned subsidiary of the Company.
The property is subject to a Deed of Mutual Covenant vide Memorial No. UB1121649 dated 21 October 1974.
The property is zoned under Aberdeen and Ap Lei Chau Outline Zoning Plan No. S/H15/24 dated 19 December 2006 for “Other Specified Uses (1) (Business)” zone.

– 202 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
Property		Description and tenure	occupancy	31 December 2007
				HK$
3.	Car Parking	The property comprises a car parking	The property is	250,000
	Space No. 15	space on ground floor of a 23-storey	currently occupied by
	Yally Industrial	industrial building completed in about	the Group for car
	Building	1974.	parking purpose.
	No. 6 Yip Fat Street
	Wong Chuk Hang	The property is held under the
	Hong Kong	Conditions of Sale Nos. 10133 and
		10134, both for a term of 75 years
	1/506th shares of	commencing from 21 February 1972.
	Aberdeen Inland
	Lot Nos. 361 and
	362

Notes:

The registered owner of the property is Bigfield Goldenford Holdings Limited vide Memorial No. UB6342518 dated 15 June 1995.
Bigfield Goldenford Holdings Limited is a wholly-owned subsidiary of the Company.
The property is subject to a Deed of Mutual Covenant vide Memorial No. UB1121649 dated 21 October 1974.
The property is zoned under Aberdeen and Ap Lei Chau Outline Zoning Plan No. S/H15/24 dated 19 December 2006 for “Other Specified Uses (1) (Business)” zone.

– 203 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

GROUP II – PROPERTY INTERESTS HELD AND OCCUPIED BY THE GROUP IN THE PRC

				Capital value
				in existing state
			Particulars of	as at
Property		Description and tenure	occupancy	31 December 2007
				HK$
4.	Units 1201–1206	The property comprises the whole of	The property is	23,802,000
	on Level 12 and	level 12 and a unit on level 13 of a 24-	currently occupied by
	Unit 1306	storey (plus 3 levels basement) office	the Group for office
	on Level 13	building completed in about 2005.	and showrooms
	Qin Jian Building		purposes.
	No. 468	The property has a total gross floor
	West Huangpu	area of approximately 1,437.3939 sq.m.
	Dadao
	Tianhe District	The land use rights of the property
	Guangzhou	were granted for a term of 50 years
	The PRC	commencing from 18 May 2004 and
		expiring on 17 May 2054 for composite
		use.

Notes:

Pursuant to 7 Commodity House Sale and Purchase Agreements dated 10 December 2004, Frankie Dominion (Holdings) Limited purchased the property at a total purchase price of RMB11,952,121.
Pursuant to 7 Real Estate Title Certificates – Yue Fang Di Zheng Zi Di Nos. C4657353, C4657354, C4657355, C4657357, C4657358, C4657359 and C4657360 dated 7 June 2006, issued by the People’s Government of Guangzhou, the property with a total gross floor area of approximately 1,437.3939 sq.m. is owned by Frankie Dominion (Holdings) Limited, a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers – Guangzhou Foreign Economic Law Office dated 14 March 2008, which contains, inter alia , the following:
(i) Frankie Dominion (Holdings) Limited has legally obtained the building ownership rights of the property and shared the relevant land use rights with all owners of the whole building;
(ii) the property is not subject to mortgage, seizure, litigation, sale, transfer and any other encumbrances; and
(iii) the existing use of the property is in compliance with the permitted use and is not contravening any PRC law and regulation of the property.

– 204 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at Property Description and tenure occupancy 31 December 2007 HK$ 5. Car Parking Space The property comprises 2 car parking The property is 538,000 Nos. 50 and 51 on spaces on the 2nd basement level of a currently occupied by 2nd Basement Level 24-storey (plus 3 levels basement) the Group for car Qin Jian Building office building completed in about parking purpose. No. 468 2005. West Huangpu Dadao The property has a total gross floor Tianhe District area of approximately 23.5 sq.m. Guangzhou The PRC The land use rights of the property were granted for a term of 50 years commencing from 18 May 2004 and expiring on 17 May 2054 for composite use.

Notes:

Pursuant to 2 Commodity House Sale and Purchase Agreements dated 5 July 2005, Frankie Dominion (Holdings) Limited purchased the property at a total purchase price of RMB440,000.
Pursuant to 2 Real Estate Title Certificates – Yue Fang Di Zheng Zi Di Nos. C4657367 and C4657368 dated 7 June 2006, issued by the People’s Government of Guangzhou, the property with a total gross floor area of approximately 23.5 sq.m. is owned by Frankie Dominion (Holdings) Limited, a whollyowned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers – Guangzhou Foreign Economic Law Office dated 14 March 2008, which contains, inter alia , the following:
(i) Frankie Dominion (Holdings) Limited has legally obtained the building ownership rights of the property and shared the relevant land use rights with all owners of the whole building;
(ii) the property is not subject to mortgage, seizure, litigation, sale, transfer and any other encumbrances; and
(iii) the existing use of the property is in compliance with the permitted use and is not contravening any PRC law and regulation of the property.

– 205 –

APPENDIX VII

VALUATION REPORT ON THE GROUP

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at Property Description and tenure occupancy 31 December 2007 HK$ 6. Flat G on Level 9 The property comprises a unit on level The property is 738,000 of Block 2 9 of a 19-storey (plus 2 levels basement currently occupied by Yuefu Building carpark) composite building the Group for staff No. 839 completed in about 1996. quarters purpose. Renmin North Road The property has a gross floor area of Yuexiu District approximately 80.77 sq.m. Guangzhou The PRC The land use rights of the property were granted for a term of 70 years commencing from 29 November 1995 and expiring on 28 November 2065 for residential uses.

Notes:

Pursuant to a Real Estate Title Certificate – Sui Fang Di Zheng Zi Di No. 0291808 issued by the People’s Government of Guangzhou, the property with a gross floor area of approximately 80.77 sq.m. is held by Frankie Dominion (Holdings) Limited , a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers – Guangzhou Foreign Economic Law Office dated 14 March 2008, which contains, inter alia , the following:
(i) Frankie Dominion (Holdings) Limited has legally obtained the building ownership rights of the property and shared the relevant land use rights with all owners of the whole building;
(ii) the property is not subject to mortgage, seizure, litigation, sale, transfer and any other encumbrances; and
(iii) the existing use of the property is in compliance with the permitted use and is not contravening any PRC law and regulation of the property.

– 206 –

APPENDIX VIII

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at (a) the Latest Practicable Date were; and (b) immediately following the allotment and issue of the Conversion Shares upon full conversion of the Convertible Bonds (as assuming no other Shares being allotted and issued at all) will be, as follows respectively:

Authorised: 1,000,000,000 Shares (as at the Latest Practicable Date) 10,000,000,000 Shares (upon passing of the relevant resolution at the SGM) Issued and fully paid, or credited as fully paid, share capital: 477,926,292 Shares (as at the Latest Practicable Date) 3,227,926,292 Shares (assuming the allotment and issue of the Conversion Shares upon exercise of the conversion rights attaching to the Tranche 1 Bonds) 5,977,926,292 Shares (assuming the allotment and issue of the Conversion Shares upon exercise of the conversion rights attaching to the Tranche 2 Bonds)	HK$ 100,000,000

	1,000,000,000

	HK$ 47,792,629.2

	322,792,629.2

	597,792,629.2

All the issued Shares shall rank pari passu with each other in all respects including the rights as to voting, dividends and return of capital. The Conversion Shares which may be allotted and issued, will, when allotted and issued, rank in all respect pari passu with all Shares then in issue as at the date of the allotment and issue of the respective Conversion Shares.

– 207 –

APPENDIX VIII

GENERAL INFORMATION

Save for the Convertible Bonds (the issue of which is subject to the approval by the Shareholders at the SGM) and share options which may be granted pursuant to the share option scheme adopted by the Company on 31 May 2002, the Company did not have any debt securities in issue and any other options, warrants, and other convertible securities or rights affecting the Shares and no capital of any member of the Group is under option, or agreed conditionally or unconditionally to be put under option as at the Latest Practicable Date.

3. DISCLOSURE OF INTERESTS OF DIRECTORS

Interests in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of each Director and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies set out in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Directors’ interests in the Shares

				Percentage of
			the Company’s
				issued share
	Number of Shares held,			capital as at
	capacity	and nature of	interest	the Latest
	Personal	Family		Practicable
Name of Director	interests	interests	Total	Date
Mr. Lam Po Kwai (a)	43,545,785	867,059	44,412,844	9.29%
		(Note (a))
Ms. Lee Yuen Bing (b)	867,059	43,545,785	44,412,844	9.29%
		(Note (b))
Ms. Wong Yau Ching	73,433	–	73,433	0.015%

Notes:

(a) These Shares were held by Ms. Lee Yuen Bing, who was the spouse of Mr. Lam Po Kwai Frankie. By virtue of the SFO, Mr. Lam was deemed to be interested in the Shares held by Ms. Lee.
(b) These Shares were held by Mr. Lam Po Kwai, who was the spouse of Ms. Lee Yuen Bing. By virtue of the SFO, Ms. Lee was deemed to be interested in the Shares held by Mr. Lam.

– 208 –

APPENDIX VIII

GENERAL INFORMATION

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he was taken or deemed to have under such provisions of the SFO) or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or were required pursuant to the Model Code to be notified to the Company and the Stock Exchange.

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to the Directors, the following persons other than a Director or chief executive of the Company had interests or short positions in the Shares and underlying shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the members of the Enlarged Group:

(i) Interests in the Shares

	Number of	Percentage of
	the issued	Company’s
Name of Shareholder	share interested	Shares capital
Golden Mount Limited_(note 1)_	129,097,209	27.01%
Chim Pui Chung_(note 1)_	129,097,209	27.01%
Solidpole Limited_(note 2)_	34,855,428	7.29%
China Everbright Holdings	34,855,428	7.29%
Company Limited_(note 2)_

Notes:

Golden Mount Limited is a company incorporated in the BVI and is beneficially owned by Mr. Chim Pui Chung, who is the father of Mr. Chim Kim Lun, Ricky (Executive Director). Golden Mount Limited has become a substantial shareholder of the Company since 17 August 2007. Under the SFO, Mr Chim Pui Chung is deemed to be interested in the Shares held by Golden Mount Limited.
Solidpole Ltd. is a wholly-owned subsidiary of China Everbright Holdings Company Ltd. which is in turn a 55.47% owned subsidary of Honorich Holdings Ltd.. Honorich Holdings Ltd. is a wholly-owned subsidiary of Datten Investments Ltd which in turn a wholly-owned subsidiary of China Everbright Holdings Company Ltd. Under the SFO, China Everbright Holdings Company Limited is deemed to be interested in the Shares held by Solidpole Limited.

– 209 –

APPENDIX VIII

GENERAL INFORMATION

(ii) Interest in the underlying Shares

			Approximate
	Number of underlying		percentage of
Name	Shares interested	Capacity	interest held
Wu Jixian	5,500,000,000	beneficial owner	999.9%

Save as disclosed in this circular, the Directors are not aware of any person as at the Latest Practicable Date who had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was directly or indirectly, interested in 10% or more of the nominal value of the issued share capital carrying rights to vote in all circumstances at general meetings of any members of the Enlarged Group.

5. DIRECTORS’ INTERESTS IN ASSETS, CONTRACTS AND IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or the controlling shareholders of the Company or their respective associates has any interest in a business, apart from the business of the Company, which competes or may compete with the business of the Company or has any other conflict of interest with the Company which would be required to be disclosed under Rule 8.10 of the Listing Rules.

So far as the Directors are aware and save as disclosed in this circular:

(i) None of the Directors had any direct or indirect interest in any assets acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2006, being the date to which the latest published audited financial statements of the Company were made up;
(ii) None of the Directors was materially interested in any contract or arrangement entered into by any member of the Enlarged Group which is subsisting at the date of this circular and which was significant in relation to the business of the Enlarged Group; and
(iii) As at the Latest Practicable Date, none of the Directors or their respective Associates had any interest in a business which competes or is likely to compete either directly or indirectly with the business of the Group, or have or may have any other conflicts of interest with the Group.

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APPENDIX VIII

GENERAL INFORMATION

6. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Enlarged Group within two years immediately preceding the date of this circular which are or may be material:

(a) an agreement dated 31 March 2006 and entered into between Dominion Trading Ltd (“Dominion Trading”), an indirectly wholly owned subsidiary of the Company, as purchaser and Mr. Lee Kun (the then director and substantial shareholder of Big Field (B.V.I.) Limited (“Big Field”), a subsidiary then owned as to 62.5% by the Group and as to 37.5% by Mr. Lee), as vendor. Pursuant to the agreement, Mr. Lee agreed to (i) sell 100 shares of US$1 each in Big Field, representing 16.67% interest in the issued share capital of Big Field, to Dominion Trading, at a cash consideration of HK$5 million; and (2) grant a call option to Dominion Trading to purchase the remaining 125 shares of US$1 each in Big Field, representing the remaining 20.83% interest in the issued share capital of Big Field, at a cash consideration of HK$6.25 million. Details of the transactions were published in the announcements issued by the Company dated 31 March 2006 and 6 July 2006 respectively;
(b) a provisional agreement dated 23 January 2007 and entered into between Bigfield Goldenford Holdings Limited, a wholly-owned subsidiary of the Company as vendor and Hang Tai Stationery Company Limited as purchaser, for the sale and purchase of the premises of the Factory Units A, B, C and D on the 7th Floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$7,700,000. Details of the transaction were published in the announcement issued by the Company dated 21 March 2007;
(c) a provisional agreement dated 10 March 2007 and entered into between Bigfield Goldenford Holdings Limited, a wholly-owned subsidiary of the Company as vendor and Formable Industrial Limited as purchaser, for the sale and purchase of the premises of the Factory Unit B on the 8th Floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$2,320,000. Details of the transaction were published in the announcement issued by the Company dated 21 March 2007;
(d) a provisional agreement dated 12 March 2007 and entered into between Bigfield Goldenford Holdings Limited, a wholly-owned subsidiary of the Company as vendor and Mrs. Cheung Nguy Khim (the ultimate beneficial owner of Formable Industrial Limited) as purchaser, for the sale and purchase of the premises of the Factory Unit D on the 20th Floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$1,980,000. Details of the transaction were published in the announcement issued by the Company dated 21 March 2007;

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APPENDIX VIII

GENERAL INFORMATION

(e) an agreement dated 10 August 2007 and entered into between Bigfield Goldenford Holdings Limited, a wholly-owned subsidiary of the Company as vendor and Khim Nguy’s Design Limited as purchaser, for the sale and purchase of the premises of the Factory Units B and C the 6th Floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$5,200,000. Details of the transaction were published in the announcement issued by the Company dated 5 October 2007;
(f) an agreement dated 5 October 2007 and entered into between Frankie Dominion (Holdings) Limited, a wholly-owned subsidiary of the Company as vendor and Mr. Cheung Kin Ming Larry and Mrs. Cheung Nguy Khim as purchasers, for the sale and purchase of the premises of the Factory Units A, B, C and D on the 2nd Floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$15,380,000. Details of the transaction were published in the announcement issued by the Company dated 5 October 2007;
(g) an agreement dated 5 October 2007 and entered into between Bigfield Goldenford Holdings Limited, a wholly-owned subsidiary of the Company as vendor and Mr. Cheung Kin Ming Larry and Mrs. Cheung Nguy Khim as purchasers for the sale and purchase of the car parking space no. 16 on the ground floor of Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong at a total consideration of HK$230,000. Details of the transaction were published in the announcement issued by the Company dated 5 October 2007;
(h) the Sale and Purchase Agreement; and
(i) the Preliminary Reorganisation Agreement.

7. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Enlarged Group which is not determinable by the Enlarged Group within one year without payment of compensation other than statutory compensation.

8. SUFFICIENCY OF WORKING CAPITAL

As at the Latest Practicable Date, after due and careful enquiry, the Directors are of the opinion that, in the absence of unforeseen circumstances and after taking into account the present internal financial resources of the Enlarged Group (including principally cash at bank and listed securities investment), the Enlarged Group will, immediately following the completion of the Acquisition, have sufficient working capital for at least 12 months from the date of this circular.

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APPENDIX VIII

GENERAL INFORMATION

9. LITIGATION

As at the Latest Practicable Date, no member of the Enlarged Group was engaged in any litigation or claim of material importance and there was no litigation or claims of material importance was known to the Directors to be pending or threatened against any member of the Enlarged Group.

10. EXPERT AND CONSENT

The following are the qualifications of the experts who have given opinions and/or advice which are included in the circular:

Name	Qualification
HLB Hodgson Impey Cheng	Chartered Accountants
	Certified Public Accountants
B.I. Appraisals Limited	Registered professional Surveyor and
	valuers & property consultants
Jones Lang LaSalle Sallmanns Limited	Registered professional Surveyor

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its reports and letters and the reference to its name in the form and context in which they appear.

As at the Latest Practicable Date, none of the above experts has any shareholding, directly or indirectly in any member of the Enlarged Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group; nor does it have any direct or indirect interest in any assets acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2006, being the date to which the latest published audited financial statements of the Company were made up.

11. GENERAL

(a) The qualified accountant of the Company is Mr. Liu Wai Hung who is a member of the Hong Kong Institute of Certified Public Accountants.
(b) The company secretary of the Company is Mr. Cheung Chiu Fan who is a fellow member of the Chartered Association of Certified Accountants, an associate of the Institute of Chartered Secretaries and Administrators and a member of British Institute of Management in the United Kingdom.
(c) The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

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APPENDIX VIII

GENERAL INFORMATION

(d) The head office and principal place of business of the Company in Hong Kong is at 1st Floor, Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong.
(e) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(f) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

12. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of the Company at 1st Floor, Yally Industrial Building, 6 Yip Fat Street, Wong Chuk Hang, Hong Kong during normal business hours of any business day up to and including the date of the SGM:

(a) the memorandum of association and the bye-laws of the Company;
(b) the published audited consolidated financial statements of the Company for each of the two financial years ended 31 December 2005 and 2006, and the published unaudited consolidated results of the Company for the six months ended 30 June 2007;
(c) the Accountants’ Report on Huscoke Group, the text of which is set out in Appendix II to this circular;
(d) the Financial Information on the Acquired Plants and Machineries, the text of which is set out in Appendix III to this circular;
(e) the letter dated 20 March 2008 on the unaudited pro forma financial information of the Enlarged Group I, the Enlarged Group II and Enlarged Group III, the text of which is set out in Appendix IV to this circular;
(f) the approval letter dated 9 November 2006 issued by the People’s Government or Xiaoyicity regarding the land use rights as refer to in the Valuation Report on the Coal-related Ancillary Businesses in Appendix VI to this circular;
(g) the written consent from HLB Hodgson lmpey Cheng, B.I. Appraisals Limited and Jones Lang LaSalle Sallmanns Limited as referred to in the paragraph headed “Expert and Consent” in this appendix;
(h) all the relevant reports as disclosed in Appendix V to Appendix VII to this circular;

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APPENDIX VIII

GENERAL INFORMATION

(i) each of the material contracts, as referred to in the paragraph headed “Material Contracts” in this appendix; and
(j) each of the circulars of the Company issued pursuant to the requirements set out in Chapter 14 and/or Chapter 14A of the Listing Rules since 31 December 2006, being the date of the latest published audited accounts of the Company were made up.

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NOTICE OF SGM

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(incorporated in Bermuda with limited liability)

(Stock code: 704)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the special general meeting of Frankie Dominion International Limited (“ Company ”) will be held at 10:30 a.m. on Monday, 7 April 2008 at the Board Room, 1st Floor, The Aberdeen Marine Club, 8 Shum Wan Road, Aberdeen, Hong Kong for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT the authorized share capital of Frankie Dominion International Limited (“ Company ”) be and it is hereby increased from HK$100,000,000 to HK$1,000,000,000 by the creation of an additional 9,000,000,000 ordinary shares of HK$0.1 each in the capital of the Company.”
“ THAT , subject to the passing of resolution numbered 1 above:
(A) the form and substance of the agreement (“ Acquisition Agreement ”) dated 11 January 2008 and made between Wu Jixian as vendor (“ Vendor ”) and Rich Key Enterprises Limited as purchaser (“ Purchaser ”) and Frankie Dominion International Limited (“ Company ”) as warrantor of the Purchaser, in relation to (i) the sale and purchase of the entire issued shares in Pride Eagle Investments Limited and the face value of the loans outstanding as at the completion of such transaction made by or on behalf of the Vendor to Pride Eagle Investments Limited; and (ii) the sale and purchase of the entire issued shares in Joy Wisdom International Limited and the face value of the loans outstanding as at completion of such transaction made by or on behalf of the Vendor to Joy Wisdom International Limited, each at a consideration (subject to adjustments pursuant to the terms of the Acquisition Agreement) of HK$1,200 million (a copy of the Acquisition Agreement has been produced to the meeting and marked “A” and initialed by the chairman of the meeting for identification purpose), as mentioned in the circular (“ Circular ”) of the Company dated 20 March 2008 (a copy of which has been produced to the meeting marked “B” and signed by the chairman of the meeting for the purpose of identification) and all the transactions contemplated thereby be and they are hereby approved;

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NOTICE OF SGM

(B) the creation and issue of the Convertible Bonds (as defined in the Circular), on and subject to the terms of the Acquisition Agreement, be and it is hereby approved;
(C) the directors (“ Directors ”) of the Company be and they are hereby generally and specifically authorized to allot and issue such number of new shares in the capital of the Company as may be allotted and issued upon the exercise of the conversion rights in full attaching to the Convertible Bonds (as defined in the Circular); and
(D) the Directors be and they are hereby authorized to do all such acts and things, to sign and execute all such further documents and to take such steps as the Directors in their discretion may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the Acquisition Agreement, the allotment and issue of the new shares upon exercise of the conversion rights attaching to the Convertible Bonds (as defined in the Circular), the issue of the Convertible Bonds (as defined in the Circular) or any of the transactions contemplated under the Acquisition Agreement (including but not limited to the execution of the instrument which will constitute the Convertible Bonds (as defined in the Circular)) and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver of such documents, which are not fundamentally different from those as provided under the Acquisition Agreement) as are, in the opinion of the Directors, in the interest of the Company and its shareholders as a whole.”

For and on behalf of the board of directors of Frankie Dominion International Limited Lam Po Kwai, Frankie Chairman

Hong Kong, 20 March 2008

Registered Office:

Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head office and principal place of business in Hong Kong:

1st Floor Yally Industrial Building 6 Yip Fat Street Wong Chuk Hang Hong Kong

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NOTICE OF SGM

Notes:

(1) A member entitled to attend and vote at the above meeting may appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. A member who is the holder of two or more shares and entitled to attend and vote at the meeting convened by the above notice is entitled to appoint more than one proxy to represent him and vote on his behalf. A form of proxy for use at the meeting is enclosed.
(2) In order to be valid, the form of proxy, together with any power of attorney or authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s registrar in Hong Kong, Tricor Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
(3) Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the meeting convened or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.
(4) In the case of joint holders of a share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto. If more than one of such joint holders are present at the above meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
(5) As at the date of this notice, the executive Directors are Mr. Lam Po Kwai, Frankie, Ms. Wong Yau Ching, Maria, Ms. So Man Yee, Katherine, Mr. Chim Kim Lun, Ricky and Mr. Cheng Kwok Hing, Andy; the non-executive director of the Company is Ms. Lee Yuen Bing, Nina and the independent non-executive directors of the Company are Mr. Au Son Yiu, Mr. Lee Johnson and Dr. Tang Tin Sek.

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AI assistant

Huscoke Holdings Limited — Proxy Solicitation & Information Statement 2008

49409_rns_2008-03-19_c420c96b-0f04-4323-980b-d88700229210.pdf

(I) VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF SALE SHARES AND SALE DEBTS INVOLVING ISSUE OF CONVERTIBLE BONDS; (II) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND

(III) NOTICE OF SPECIAL GENERAL MEETING

Financial adviser to the Company

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(I) VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF SALE SHARES AND SALE DEBTS INVOLVING ISSUE OF CONVERTIBLE BONDS;

(II) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL;

AND

(III) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

THE SALE AND PURCHASE AGREEMENT

Parties:

Assets to be acquired

Consideration

Adjustments to the Acquisition Price

LETTER FROM THE BOARD

Closing Conditions

First Acquisition

Second Acquisition

Completion

First Right of Refusal

TERMS OF THE CONVERTIBLE BONDS

Issuer

Principal amount

Interest

Maturity Date

Conversion

Conversion Price

Adjustment to the Conversion Price

Ranking

Transferability

Voting rights

Listing

PROMISSORY NOTE

INFORMATION ON THE TARGET GROUP

REASONS FOR THE PROPOSED ACQUISITION

FINANCIAL EFFECTS OF THE ACQUISITION ON THE GROUP

Financial effect of first acquisition

Earnings

Assets

Liabilities

Financial effect of second acquisition

Earnings

Assets

Liabilities

Financial effect of both first acquisition and second acquisition

Earnings

Assets

Liabilities

FINANCIAL AND TRADING PROSPECTS

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

IMPLICATION FROM THE LISTING RULES

SGM

PROCEDURE FOR DEMANDING A POLL

RECOMMENDATION

ADDITIONAL INFORMATION

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP FOR EACH OF THE THREE YEARS ENDED 31 DECEMBER 2004, 2005 AND 2006

Results

Assets, liabilities and minority interests

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR EACH OF THE TWO YEARS ENDED 31 DECEMBER 2005 AND 2006

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of the Company

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Business combinations

Investments in associates

Revenue recognition

Huscoke Holdings Limited Proxy Solicitation & Information Statement 2008